Major amendments to mining laws in Mexico have been in effect since May 2023, leaving an impetus for mining companies to shift their approach in how they secure mining concessions and conduct their overall mining operations.
To ensure a healthy ramp up for new mines and plants to open in Mexico, understanding recent regulatory reforms and ensuring compliance to them are paramount to avoiding costly fines and other legal consequences down the road.
Furthermore, for mines with headquarters based in the United States or Canada, there is the additional challenge of remote mine management, which can make it more difficult to oversee operations and detect non-compliance or other issues to quickly resolve them.
2023 Mexican Mining Law Reforms
First introduced in March 2023 and passed in May the same year, several amendments to Mexico’s Mining Law, National Water Law, and Ecological Balance and Environmental Protection Law have been made which now impose stricter regulations on all mining operations in the country.
Below are a few of the major updates that pose the most significant impact on mining operations and planning:
Mining Concession Duration and Process
As of May 2023, all mining concessions are now awarded in a public bidding process, whereas they were previously granted on a “free land, first applicant” basis. Today, only once all permits and authorizations have been met regarding environmental, social and labor requirements, will a bidder have a chance of being awarded a concession.
The duration of the concession granted has also been adjusted. Previously, the tenure for a concession was 50 years, subject to a one-time renewal for a second term of the same duration. With updates to mining laws, this has been reduced to 30 years, subject to a shorter second term of 25 years.
Restrictions on Mineral Extraction
The extraction of any minerals within the parameters of an area was previously allowed if a mining operator held a concession over that land. This is no longer the case for mines, with their extraction activities now limited to the specific minerals described in the mining concession.
Social and Environmental Regulatory Requirements
A lack of water in certain states in Mexico for both people and domestic use has prompted the government to also adjust regulatory requirements on mining concessions based on the availability of water. Concession holders are also required to submit monthly reports of daily measurements of water quality indicators of discharges made to surface and groundwater.
Additionally, existing concessions may be reduced in volume or duration or even cancelled subject to the government’s discretion on a case-by-case basis. And once granted, water and mining concession holders also need to ensure they recycle or reuse at least 60 percent of the water used under the concession.
There are also several revisions and expansions to indigenous and public consultation rules and processes, indicating to mining companies that more focus and resources needs to be allocated to community engagement. Among them, the need for an indigenous consultation to be carried out prior to the granting of the concession title, with the costs of consultation covered by the party applying for a concession.
Ensure a Healthy Ramp Up and Compliance for Remote Mines in Mexico
These regulatory updates must be strategically integrated and considered during the mine planning stages for mines opening in Mexico, and budgets should be aligned to account for changes needed. For example, decisions on capital expenses such as the types of mining equipment needed are likely to be affected by restrictions on the types of minerals extracted. Additionally, the issuance of plant commissioning permits and licensing may also be affected by evolving environmental regulations. Hence, all requirements for new plants should be carefully factored in during the mine planning stages.
Ensuring compliance with these regulations to avoid legal consequences, fines and downtime is necessary during the mine planning stages. However, this can often be challenging with remotely managed mines with local contexts which often have repercussions which go beyond regulations. This could include local ways of communicating and conducting business. As such, a thorough understanding of the local context and landscape is needed with on-the-ground teams to communicate effectively with remote management teams.
The Unison Mining team can work with your team to ensure a healthy ramp up that is compliant with recent regulations. Our on-the-ground teams understand the local context in Mexico and are ready to collaborate with you to manage your mine opening in line with updated regulations.
