Reforms to Mexican mining legislation, particularly provisions granting the state exclusive powers over mineral exploration, are worrying Canadian investors.

The new legislation, sent to the Executive Branch and awaiting publication in the Official Gazette, establishes that exploration activities are reserved for the geological service of the SGM or other federal entities. Likewise, it reduces the maximum duration of mining concessions from 100 to 80 years and prohibits the granting of permits in areas of water scarcity.

“There is great concern among Canadian investors on the issue of exploration, since, in the way the reform was written, the State decides whether or not to open the key to exploration, at this stage fundamental of mining,” said Armando Ortega, president of the mining commission of the Canadian Chamber of Commerce in Mexico (CanCham), in conversation with BNamericas.

Of a total of 167 foreign-invested companies identified with mining operations in Mexico in the first half of the year, 71.3%, or 119, are headquartered in Canada, according to the most recent sector data from the Ministry of Economy.

Unlike the original initiative presented to the Lower House by President Andrés Manuel López Obrador in late March, the flexible proposal ratified by the Senate stipulates that non-renewable five-year exploration agreements can be concluded with persons with information on the existence of minerals in unallocated lots.

And if minerals are discovered on these lands, individuals could obtain the exploration concession if they offer at least 90% of the highest bid at an auction.

“What matters is that the government has control, leadership, it is he who has the decision, the last word; and this last word can […] decide not to do it,” Ortega added.

Luis Humberto Vázquez, president of the local association of mining engineers, metallurgists and geologists AIMMGM, said in a recent interview with BNamericas that he did not see it feasible to leave exploration to SGM because it does not have the capital required for such an activity. requires.

And Ortega told Reforma newspaper that Canadian mining companies have nearly US$700 million available for exploration.