Mining - Mexico

Mining royalties could be imposed in Mexico next year, Fresnillo says

Mining royalties could be imposed in Mexico next year, Fresnillo says

By -

Mining royalties could be imposed in Mexico as soon as next year, according to Mexico City-based Fresnillo's (LSE, BMV: FRES) head of investor relations Gabriela Mayor.

The proposals are already "on the agenda," Mayor told a telephone conference to discuss Fresnillo's 2012 production, and will be discussed when the senate and chamber of deputies meet to set the 2014 budget this autumn.

No indication has been given about what the percentage will be, she added.

The introduction of mining royalties would result in "higher risk" for Fresnillo, Mayor said, and the company is lobbying the government for any royalty to be imposed on net profits rather than on production or revenues.

THE CURRENT SYSTEM AND NEW MINING BILL

Mexico is one of the few countries not to impose royalties on the mining sector.

Under the current system, there are no taxes or levies imposed specifically on the mining industry. Companies are subject to standard corporate income tax rates, which are determined by the federal government.

A new mining bill, outlined in President Enrique Peña Nieto's pact for Mexico (Pacto por México), is likely to include reforms to concessions and mining rights payments aimed at benefiting local communities.

It is not clear if the bill, which is expected to be presented in the first half of 2013, will also include proposals for royalties.

Fresnillo, which is 77.1% owned by compatriot Industrias Peñoles (BMV: PE&OLES), is the world's biggest primary silver producer, and produced 41Moz of the metal in 2012.