Canadian investors worried about Mexico mining reforms

Mexico’s mining reforms, especially provisions that give the State exclusive exploration rights, are worrying Canadian investors.

The reforms were sent to the executive and are pending publication in the official gazette. The reforms stipulate that exploration will be carried out by geological service SGM or other federal entities. The maximum duration of mining concessions was reduced from 100 to 80 years and permits will not be granted for areas with water scarcity.

“There is great concern of Canadian investors about the issue of exploration, since in the way the reform was drafted, it is the State that decides whether or not to open exploration, that fundamental stage of mining,” Armando Ortega, the head of the Canadian Chamber of Commerce’s mining area, told BNamericas.

Over 70% of foreign miners in 1H22 were headquartered in Canada, according to most recent economy ministry data.

But the reforms the senate approved were a watered down from the government’s original proposal.

Entities which have information on minerals in unassigned lots may enter into non-extendable five-year exploration agreements with public entities. If minerals are found in these areas, the entities may obtain an exploration concession if they offer at least 90% of the highest proposal in a tender.

"What matters is that the government has control, the direction; it makes the decision, has the last word, and that last word can … be a ‘no’," added Ortega.

Luis Humberto Vázquez, president of mining engineers, metallurgists and geologists association AIMMGM, told BNamericas in a recent interview that it was not feasible for SGM to handle exploration because it does not have the required resources.

And Ortega told newspaper Reforma that Canadian miners have earmarked some US$700mn for exploration.