Factors that will make legal framework in Mexico more powerful and independent for mining activities
There are different factors that will help this purpose:
First, the Mining industry in Mexico is very strong and well respected, there are more than 575 mining companies operating in Mexico, which generate more than 370k direct jobs and more than 300 out of this companies have foreign capital investments. This is very relevant since Mexico is still one of the most attractive countries in Latin America for mining exploration and the supply chain of the industry is perfectly integrated, which favor its growth and development, therefore we could fairly say that in the more of 200 years of independent life of Mexico the mining industry has remained as one of the most important motors and pillars of Mexican economy, and this is usually recognized by municipal, local and federal governments in our country, including the legislative bodies, therefore, the legal framework of the mining industry in Mexico has many advocates (not only lawyers) that will work to keep it strong and independent.
Second, the Mining industry in Mexico is very united, unity has been a key factor for the defense of the interests of the mining industry, as we can easily perceive in the existence of diverse Mexican institutions and associations such as the CAMIMEX, the AIMMGM with all of its chapters within the Mexican Republic, the Mining Clusters, the Women mining associations, but also, International Associations of Mining with presence in Mexico, that are currently and will continue to work closely with the current and future authorities of this country to protect the interests, the independence and the core values of this amazing industry.
So I can say to all the women and men involved with mining in Mexico, stay strong and stay united, this is the key.
· What can Mexico learn from other legal frameworks in others mining jurisdictions?
The mining industry in the world is constantly evolving, is extremely innovative and we can always look for better practices outside the boarders of Mexico. For example, we are seeing with good eyes that non-traditional countries of the region such as Panama and the Dominican Republic are making good efforts to promote and increase the relevance of the mining industry in their countries, recognizing the potential of the industry for the economic development and growth of their nations. On the other hand, there are some legal frameworks that can obviously be improved in Mexico to increase our competitiveness in a hyperdynamic mining world where investors are looking for the better options to direct their investment, created social and economic wealth and grow their businesses, Mexico should be their first option, we should work together to achieve that. There are some very simple steps that could be taken, such as the amendments of the public policies and legal frameworks in Mexico that encourages the mining investment and a better tax policy towards the industry, including if possible some “tax stability agreements” and more competitive and attractive incentives than in other countries, for example, by allowing the immediate deduction of the exploration preoperative expenses, which currently are deducted only at a rate of 10% per year. In countries such as Peru, Canada and Australia this expenses are deducted at a rate of 100% and in Argentina at a rate of 200%. If we agree that everything starts with mining, and that mining also starts with exploration, this could be a trigger for our competitiveness and attractiveness.
But also, we should learn from the lessons from our neighbor countries that could on the contrary affect the mining industry. For example, few weeks ago, the head of ministers of Peru, Mirtha Vásquez, made an statement where she announced declared in a public speech that the Peruvian government, under the presidency of Pedro Castillo was not going to authorize new permits of exploration and exploitation in the region of Ayacucho, which has 4 (four) relevant mining projects in operation, announcing that the process of closure of these mines was to be started immediately. This caused immediate confusion, uncertainty and unconformities among the mining industry of Peru, affecting as well the mining industries involved and creating fear among thousands of Peruvian families that subsist because of the existence and operation of these mining projects. The Peruvian government had to issue and official statement where they denied the statement of the aforementioned ministry and stated that they would be respecting the investments in the sector with strict adherence to the rule of law, in order to contained the chaos created after the statement. This gives us a big lesson, the public speech and the statements made by public officials need to be very carefully and responsibly said, in order to respect the rule of law, therefore, improvised, unfounded and insidious comments by public officials should not be tolerated, especially not in Mexico.
Please feel free to contact us in case you’d like to discuss further these ideas.
Lic. Rubén Alberto Cano Balcorta