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Mining companies headed for open pit showdown in Mexico

Bnamericas Published: Wednesday, October 05, 2022
Mining companies headed for open pit showdown in Mexico

Mining companies are heading for a permitting showdown with Mexican authorities, with a glut of new applications pending for open pit projects, which environment ministry Semarnat has pledged to block.

The ministry reaffirmed an earlier commitment not to approve new open pit mines in May, stating that the move is aimed at protecting communities and wildlife from potential environmental impacts.

“The Mexican government maintains its commitment not to approve new permits for open pit mining due to the high quantity of exploitation permits awarded [under previous administrations],” Semarnat said.

“With this, we ratify our commitment to life, health and ecology, for the benefit of our communities and the health of our ecosystems.”

PERMIT APPLICATIONS

Despite this pledge, mining companies have applied for or are preparing applications for at least seven open pit projects in the country, ranging from small developments to a multi-billion dollar mega project.

At the top end of the scale, Southern Copper plans to submit an application for its US$2.9bn El Arco project, which is expected to produce 190,000t/y copper and 105,000oz/y gold, with first production estimated for 2028.

“The company has started the baseline study and is reviewing the basic engineering analysis to request the environmental impact permit,” it said in its Q2 MD&A report.

Teck Resources and new 50:50 JV partner Agnico Eagle Mines are also targeting an environmental permit for the US$842mn San Nicolás copper-zinc project.

“A detailed plan to complete a feasibility study, permitting, and community engagement has been developed, with initial work underway since January 2022,” the companies said in a September release.

Projections from Teck last year outlined a planned environmental impact study submission in late 2021, with approval estimated in late 2022, to pave the way for construction and first production at the start of 2026.

On a smaller scale, Sonoro Gold filed an environmental permit application for its US$26mn Cerro Caliche gold project (pictured) in May.

Sonoro hopes to receive approval in 2H22, according to a July presentation.

Minera Alamos also plans to submit permit applications for its US$28.1mn Cerro de Oro gold project, after completing a PEA this week.

“The company intends to advance efforts related to the application for these documents prior to a decision being made to develop the project,” the company said.

Zacatecas Silver CEO Bryan Slusarchuk told BNamericas he plans to submit an environmental application for the recently acquired Esperanza gold project by end-2022, despite public opposition to the project from Semarnat.

“Ultimately, the environmental impact of the project will be determined through the EIA [environmental permitting] procedure established by Mexican mining law,” he said.

Chesapeake Gold plans to submit permit applications for its US$359mn Metates gold project following the completion of a PFS.

CEO Alan Pangbourne told BNamericas previously that the company is aiming for first production in 2025, but this will depend on permitting.

“Generally in Mexico, I get the impression that if you do it right, you can get your permits through,” he added.

Discovery Silver is targeting receipt of construction permitting for its US$368mn Cordero primary silver project in early 2024, according to a September presentation.

SHIFTING UNDERGROUND

GoGold Resources, Orla Mining and Endeavour Silver have said they are evaluating underground operations at projects previously envisaged as open pits (Los Rico South, Camino Rojo sulfides and Pitarrilla, respectively).

This shift is in part due to a tougher permitting outlook for open pit assets.

“We believe that [securing environmental permits for underground operations] is more likely to occur based on metals prices and the political climate in Mexico. It’s a great mining jurisdiction but underground mining is more favorably viewed than open-pit mining, not just in Mexico but globally,” Endeavour CEO Dan Dickson told BNamericas last month.

TRACK RECORD

President Andrés López Obrador's (AMLO) Morena administration has blocked four open pit mining projects – Invecture Group’s Los Cardones, Argonaut Gold’s San Antonio and Cerro del Gallo, and Almaden Minerals’ Ixtaca (Tuligtic). All are gold assets.

But environmental permits have been secured for Orla's Camino Rojo oxide gold mine and Southern Copper’s US$159mn Pilares copper project since the start of 2019.

Semarnat approved a permit application for Torex Gold’s US$848mn Media Luna gold-copper-silver asset this week, but the project is planned as an underground operation.

Endeavour Silver is also awaiting a decision on a permit application for its US$175mn Terronera underground silver project.

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