Dear Clients and Friends,
On May 8, 2023, the Head of the Federal Executive published a decree, in the Federation’s Official Gazette, containing a series of amendments to the Mining Law; the Law of National Waters, of Ecological Balance and Environmental Protection and; the General Law for the Prevention and Integral Management of Mining Waste, which entered into effect the day after its publication, on May 9, 2023.
The amendments, promoted and published by the Federal Executive, aim to optimize the State’s control over the mining activity in Mexico, increasing the obligations of the mining concession holders and reserving in favor of the State certain activities.
The main objectives of the amendments in this decree are to:
- Change the name of the law from “Mining Law” to “Law of Mining”.
- Reserve exclusively for the State the mining exploration, granting private parties only the right to exploit, manage and smelt minerals
- Eliminate the concept of free land and establish a single mechanism for granting mining concessions through a bidding process.
- Establish the obligation to enter into an agreement for the use of land, in cases where the concessions are granted over an area occupied by indigenous or Afro-Mexican people. This agreement shall contemplate a compensation equivalent at least to 5% (five percent) of the amount resulting from deducting, from the fiscal results set forth in the Income Tax Law, the sums paid by the titleholder of the concession as non-deductible contributions.
- Reduce the term of the concessions to 30 (thirty) years, extendable for an additional term of 25 (twenty-five) years. Once the extended term expires, the previous titleholder may participate in the bidding process for the same lot and shall have a preferential right if the bid submitted matches the highest proposal. If authorized, the concession shall be granted for a non-extendable term of 25 more years.
- Eliminate the preferential status of the mining industry over other industries.
- Eliminate the possibility of transferring the exploration and/or exploitation rights arising from mining concessions.
- The transfers of mining concessions titles shall be subject to the approval of the Directorate General of Mining
- Mining concessions shall only grant the right to exploit, smelt and manage minerals expressly provided for in the respective concession.
- The amendments include the obligation to provide a financial instrument which will serve to guarantee the prevention, mitigation, and compensation measures set forth in the corresponding social impact assessment.
- A new classification for water usage in the mining industry is established.
- The use of national waters to transport materials deriving from mining activities is forbidden.
- The titleholders of mining concessions and of national waters for mining use are obliged to submit to the Ministry of Environment and Natural Resources, for its authorization, a Program for the mine’s Restoration, Closure, and Post-Closure.
The amendments published, in turn, contain several transitory provisions, which have the following consequences:
- Applications in process to obtain new mining concessions shall be rejected without further action.
- The mining concessions granted before the decree entered into effect shall have the duration set forth in the corresponding title.
- The holders of mining concessions shall, within 365 days starting from the date of decree’s legal validity: (i) provide the financial instrument and, (ii) the Program for the Restoration, Closure and Post-closure of mines for authorization.
- Within a period of 90 days starting from the date of enforcement of the decree, the holders of water concessions whose purpose is the mining industry shall request the National Water Commission to change the concession from industrial use to industrial mining use.
The published amendments, mainly to the Mining Law, generate uncertainty for the members of the mining industry, especially for those companies whose main purpose is mining exploration. The reason for this is that the parameters on which their main activities are carried out and on which their investments were made have now changed, exposing and threatening the growth of the mining industry in Mexico.
Should you have any questions or comments regarding the foregoing, please do not hesitate to call your usual contact at the Firm.
Práctica de Minería
Lic. Pablo Méndez Alvídrez / [email protected]
Lic. Alejandro Guerra Herrera / [email protected]
Lic. Jorge Alberto Hernández Ogaz / [email protected]
Lic. Kevin Daniel Rico Motis / [email protected]
Lic. Yasmín Andrea Gutiérrez Lerma / [email protected]
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