Mexican mining remains sluggish amid legal uncertainty

Mexico's mining sector remained “sluggish” in the third quarter despite the favorable effects of rising prices, including gold reaching new highs, according to central bank Banxico.

The uncertainty surrounding the current and future legal framework for mining activity is a cause for concern in the sector, according to Banxico's quarterly report on local economies across the country. (Available to download in Spanish in the Documents box.)

“Among the common factors that limited non-oil mining, executives surveyed in all [Mexican] regions stated that uncertainty over the reform of the Mining Law continued to affect their operations,” the report said.

"They also pointed out problems associated with the ban on open-pit mining, exploration permits, limitations on water use and the delay in granting permits for extraction and construction of waste processing plants." 

The policy of freezing the granting of concessions, which has prevailed since leftist Andrés Manuel López Obrador came to power in late 2018, coupled with the slowdown in the processing of permits, has continued to affect the mining industry's performance.

The May 2023 reform of four laws governing the sector, including the mining law, still lacks the relevant regulations. Furthermore, exploration by the private sector may suffer as geological service SGM was given exclusivity over the activity. 

The industry expects investment in Mexico's mining sector to fall by more than 20% next year to about US$3.8 billion, according to Pedro Rivero, head of mining chamber Camimex. The group expects exploration capex in the country to have fallen to US$500mn this year from US$600mn in 2023, and to further decline to US$400mn in 2025.

In mid-August, the lower house's constitutional committee approved a proposal from the previous López Obrador administration to ban open-pit mining. However, neither chamber of congress has debated the initiative in plenary sessions.

Earlier this month, President Claudia Sheinbaum announced that the legal initiative to ban open-pit mining will be reviewed.