Mexico pledges to block open-pit mining projects

Mexican authorities confirmed a commitment to block new open-pit mines due to alleged environmental damage, in a further sign of a regulatory crackdown targeting the mining sector.

Environment ministry Semarnat issued the pledge in a release backing residents’ protests against the Esperanza gold project in Morelos state, which the ministry said poses a risk to health, the environment and water resources in surrounding communities.

The ministry mistakenly said the project belongs to Toronto-based Alamos Gold, but it was acquired by Canadian junior Zacatecas Silver in a deal worth up to US$60mn in April.

The statement comes amid growing concerns over political risk faced by miners in Mexico, with industry chamber Camimex accusing the government of an “illogical” attack on the industry, involving a tougher approach to permitting, a freeze on concessions and a new law restricting lithium mining to the state.

Semarnat has blocked a string of environmental permit applications and this month suspended Vulcan Materials’ SAC TUN limestone quarrying operations in Quintana Roo following an inspection, citing damage to ecosystems, which the company denies.

OPEN-PIT BAN?

“The government of Mexico maintains its commitment not to award new authorizations for open-pit mines following the high quantity of exploitation permits granted in the neoliberal period [or under previous administrations],” Semarnat said in the release.

The statement mirrors comments by environment minister María Albores a year ago, who said there is a de facto ban on new open-pit mining projects in the country, although this has not been confirmed as official policy.

“[Open pit mining] … has been banned in our country since our president said it was banned; so, not a single permit has been given by the environment ministry,” Albores said last year.

MIXED RECORD

The administration has blocked four open-pit mining projects. These are Invecture Group’s Los Cardones project, Argonaut Gold’s San Antonio and Cerro del Gallo assets and Almaden Minerals’ Ixtaca (Tuligtic). All are gold assets.

Despite Albores’s comments, other open-pit projects have received environmental permits under the current government, including Orla Mining’s Camino Rojo project, which began commercial production this year after Semarnat approved a permit in August 2020.

US-based Southern Copper, a subsidiary of Mexican conglomerate Grupo México, also confirmed receipt of environmental permits for its US$159mn Pilares copper project in its 2Q19 financial report.

Pilares is scheduled to begin production in 2022.

HOPE FOR ESPERANZA?

As well as open-pit projects in general, Semarnat’s statement raises concerns over the future of the Esperanza project, which has previously been held back by local political opposition, and has been the target of local protests.

Some residents and NGOs in the Cuentepec settlement in Temixco municipality, near the Esperanza project, last month announced a decree to ban mining in territories that Nahua indigenous communities have traditionally occupied.

“[Semarnat] reiterates the importance of ensuring the protection and conservation of ecosystems and natural resources, hand in hand with communities, and recognizes the declarations of these [communities] before the mining project initiatives in their territories, as is the case of Temixco, in Morelos state, where protest movements have been identified to demand their right to a clean environment,” the release said.

The ministry said the Esperanza project poses a risk to the health and environment of at least 200,000 people, as well as increasing pressures on water resources.

Zacatecas Silver did not immediately respond to a request for comment.

But the project will need an environmental permit to advance.

Under the Alamos deal, Zacatecas Silver will pay US$5mn to the company upon approval of an environmental impact assessment report for the project.

Zacatecas Silver CEO Bryan Slusarchuk said the acquisition was transformational for the company, which is focused on pushing it toward production, beginning with an updated resource estimate this year and an economic study based on the update.

A 2011 PEA by former owners Esperanza Resources showed average production of 103,000oz/y gold.