The good, the bad and the ugly for mining in Mexico in 2025

The end of the year has brought encouraging news for Mexico's mining sector, as in early December, President Claudia Sheinbaum announced a review of the bill to ban open-pit mining, and then the economy ministry, led by Marcelo Ebrard, demonstrated a willingness to expedite permits, particularly environmental ones.

However, not all is smooth sailing. The budget approved for 2025 includes increases to the extraordinary mining taxes, while the regulations for four laws reformed in May 2023 – including the mining law – remain unpublished, a delay that has primarily impacted exploration.

The policy of freezing the awarding of concessions, in place since leftist president Andrés Manuel López Obrador took office in late 2018, combined with a slowdown in permitting processes, has continued to hinder the performance of the mining industry.

The May 2023 reforms, which gave Mexico’s geological service (SGM) exclusive exploration rights, have further complicated private sector participation, affecting the search for minerals.

As a result, the industry expects investments in the country's mining sector to drop by over 20% in 2025, from approximately US$5bn in 2024 to US$3.8bn, according to the head of the mining chamber (Camimex) Pedro Rivero. 

Exploration investments, which totaled more than US$600mn last year, are projected to have declined to US$500mn in 2024 and are expected to fall again to US$400mn in 2025, Rivero says.

Renewed optimism

The proposal to ban open-pit mining, initially introduced by López Obrador in February as part of a 20-bill package, aims to amend article 27 of the Mexican constitution.

In August, the chamber of deputies’ constitutional affairs committee approved the proposal, but neither the upper nor lower chambers have debated it in plenary sessions as yet. This suggests that the initiative, at least in its current form, may not move forward.

This month, Sheinbaum announced a review of the proposal, sparking renewed optimism in the sector. Previously, speculation about the initiative's future arose when she omitted it from her list of 100 priorities upon taking office in October.

According to Camimex, a total ban on open-pit mining would lead to an annual economic contraction of US$13bn, equivalent to 1% of GDP. Such a ban would also limit Mexico’s role as a producer of nine critical minerals essential for North America’s energy transition, while countries like the US and Canada permit open-pit mining under strict regulations.

In addition to the review of the proposal, the mining sector anticipates an increase in the award of permits required to advance mining projects. Rubén del Pozo, president of the local association of mining, metallurgical and geological engineers (AIMMGM), recently reported progress in clearing administrative bottlenecks.

“A month ago, we were there with the coordinator of the extractive activities unit [Fernando José Aboitiz Saro]. He told us that he was making his staff available... a working group was set up and we brought a list of about 70 issues that we identified as halted, and they began to be addressed, and they are being addressed.” 

He added, “So, we see a willingness to get things out. That's good.”

Aboitiz Saro, appointed by economy minister Ebrard in October, is part of Sheinbaum’s cabinet.

Tax burden

Citing the non-renewable nature of mineral resources, Mexico’s finance ministry proposed increases to special and extraordinary mining taxes in the 2025 budget. These rates would rise from 7.5% to 8.5% and 0.5% to 1%, respectively, as outlined in articles 268 and 270 of the federal tax law.

Camimex has expressed concern over these proposed hikes, warning they could jeopardize more than US$6.9bn in new project investments over the next two years.

The increases "would have an impact on a sector that has already seen reduced contributions and investments due to the paralysis caused by the lack of new concessions, over-regulation and threats of a change in the legal regime," it said.

The chamber noted that Mexico’s total tax burden on mining – 52.68% – already puts it at a disadvantage compared with competitors like Chile, Peru and Canada. The additional increases would further disincentivize exploration, which has dropped by 50% since the 2014 tax reform. The resulting legal uncertainty could diminish Mexico’s appeal as an investment destination.

Pending regulations

The mining sector is still awaiting the publication of regulations for the mining law and other reforms enacted last year. Del Pozo said last week that the AIMMGM is hoping for more "flexibility" in the stipulations made in the legislation to improve investment prospects, particularly in exploration. This has been communicated to the authorities, he added, who have shown openness to making adjustments.

Meanwhile, two constitutional challenges against the 2023 mining reforms are pending in the supreme court. If the reforms are struck down, a new mining law may need to be drafted.

Although Del Pozo acknowledged that designing a new and improved law is a possibility that has surfaced within the sector to avoid having to "patch up" the current legislation, it has not been conveyed to the authorities, nor has any formal proposal been made in this regard.

"They have told us there is full willingness to make all the necessary adjustments.... So far, we welcome the willingness to make changes. For us, that's a win. It would be extraordinary if we could sit down to design a new law, but who knows," he said.