Guanajuato legislators call on Mexico to reinstate mining fund

Legislators in Mexico’s Guanajuato state called on the federal government to reinstate the mining fund, which distributed royalty cash to local communities.

Members of the state congress backed a proposal presented by the conservative opposition PAN party, calling for the state government to urge President Andrés Manuel López Obrador’s (AMLO) leftist Morena administration to restore the abolished fund, local daily El Sol de León reported.

Mexico introduced a 7.5% mining royalty and an additional 0.5% extraordinary mining rights levy on revenues for gold and silver producers in 2014, with the bulk of proceeds previously earmarked for social infrastructure projects in mining communities, managed through the mining fund.

The fund was seen a key tool to maintain community support for mines and projects.

But under changes introduced by AMLO in 2019, the majority (85%) of proceeds are now directed to a federal schools infrastructure budget – which does not prioritize mining communities – with the remainder split between the federal government (10%) and economy ministry (5%), while the mining fund was scrapped in 2020.

The Guanajuato motion was passed by a majority of 28 to seven against, with Morena lawmakers opposed.

Last year, PAN senator José Bermúdez Méndez said it is unclear how mining royalty cash is being deployed since the fund was scrapped.

Proceeds raised from the royalty and extraordinary mining rights since end-2018 had amounted to around 12.5bn pesos (about US$600mn), he said.

“Today we don’t know with clarity how much money the education and economy ministries have received from the mining royalties, nor what they have done with these resources, in which works or programs or in which states or regions they have been used, or under what criteria they have been assigned to projects, something which today appears to be totally at the discretion of the executive power,” Bermúdez told the upper house.

“The situation cannot continue like this.”

Higher metals prices could also lift royalty and extraordinary rights proceeds to 11.5bn pesos in 2022, he added.