Mining guild reflects on mass exodus of juniors amid regulatory turmoil

The devastating effects that the mining reforms enacted in May 2023 by the administration of Mexican President Andrés Manuel López Obrador are becoming ever clearer.

Among other things, the reforms involve a freeze on exploration permits, which hit junior companies hard. Instead, geological service SGM has been granted exclusive exploration rights.

In this interview, Luis Humberto Vázquez, the head of the association of mining engineers, metallurgists and geologists of Mexico (AIMMGM), talks to BNamericas about the details of the modifications and expresses hope that things will change once Claudia Sheinbaum takes office on October 1.

BNamericas: What aspects of the mining reforms are the most worrying for AIMMGM?

Vázquez: Apart from the problems that the mining law that came out in May 2023 may cause us, what generates most uncertainty is that the corresponding regulations haven't been issued.

Certain things related to exploration are mentioned there. All that would affect us, but we're confident that there will be things in the regulations that will mitigate these effects.

Normally, the authority has 180 days after the law is enacted to issue the regulations, but one year later and they still haven't been issued. That's our main concern. We need to see the regulations to see what the effects really are.

During all this time, we met with the authorities and expressed our points of view. So, we’re confident that they have taken us into account and that the regulations will come. But until we see them, we cannot really know what affects us. That is the pending issue for me.

BNamericas: Do miners have room for maneuver in this situation?

Vázquez: In the short and medium term, yes. We still have the concessions currently in force. But not in the long term. Junior companies live by exploring small projects. I believe they would be greatly affected and that’s being noticed.

Through these companies, we saw large investments in exploration, and that’s now gone. Most have left.

BNamericas: How many have left?

Vázquez: I believe that at least 50% of junior companies have pulled out and the other 50% are only just surviving. But those companies will also have to leave if there’s nothing in the regulations that helps them.

BNamericas: What do you expect from the next administration?

Vázquez: We had the opportunity to meet with the people behind all the candidates, with all their coordinators on mining, on water.

We do see greater openness from everyone. So, I’m very optimistic that we’re going to continue having the support of the authorities to move forward, but we have to continue lobbying the lawmakers, the senators, so that they listen to us and understand what mining is and what importance it has.

BNamericas: Under the new legislation, SGM has exclusive exploration rights. Does the service have the capabilities?

Vázquez: I trust the geological service. I think it has very capable people, but it doesn't have very clear guidelines on how to [explore]. They weren’t told how, or in what way or with what money. That means it's impossible.

They also have to wait for the regulations.

The geological service has the knowledge and people necessary to conduct good exploration in Mexico. It’s done it before. Why did it stop? Because they didn't give it funds. So, if that continues, it won't be able to do anything. We need the rules to be clear and I believe that by advancing we can work together with SGM.

BNamericas: By how much should the SGM budget increase to be able to carry out exploration?

Vázquez: In the mining industry, in a good year, when we have some certainty, we invest around US$1.5bn.

BNamericas: Per year?

Vázquez: That's right. And to find new targets, [SGM] would have to dedicate at least twice as much. Around 70% of the national territory has exploration potential but only 25% has been explored. So, to explore the rest requires a very large amount.

BNamericas: Are you confident that the reforms will be rejected by the supreme court?

Vázquez: There’s a good chance that they will, that is, the unconstitutionality is clear. We’re confident, but we’re going to wait.

BNamericas: How much time does the sector have left if things continue as they are?

Vázquez: We can hold out for a long time, but I’m confident that we’re going to move forward. Mining has a 500-year tradition in Mexico and we won't stop. We'll have to continue finding a way because [the industry is] also essential for the Mexican economy. Without minerals, there is no life.

BNamericas: What other obstacles are hindering the sector at present?

Vázquez: I believe that there are ideologies of certain people based on unfounded things. They say that we pollute, that we consume all the water, and that’s not true. I believe that this ideology is going to change as we do better to make it known what mining really is.