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Mexico-focused miners cite govt ignorance and red tape as factors hindering progress

Bnamericas Published: Thursday, November 17, 2022

Although the freezing of mining concessions during the government of Andrés Manuel López Obrador threatens the future of the mining industry in Mexico, companies say the real problem for those with more advanced projects is the slowness in obtaining permits given the government’s ignorance of the industry.

“Right now, there are enough concessions. The problem is to take the next step, the permits to build a plant, that’s a real ordeal. If it has been under other governments, in this one it’s worse,” Salvador García, director of operations at Starcore International Mines, told the Latin America Gold and Silver congress on Wednesday.

"It’s not the best moment that the mining industry is going through in terms of the growth of new operations, and those who are doing so [expanding] already have the permits," he added.

Hernando Rueda, country manager of Vizsla Silver, said: “When we go to the operations stage or we want to start developing or optimize a project, to start producing, obviously we have to obtain MIAs [environmental impact authorizations] which are the ones that right now are creating issues for several companies that are waiting for authorizations or with ambitious projects such as advanced exploration.”

Rueda, who is also president of the Sinaloa mining cluster, told BNamericas there is an advanced-stage project in Sonora state where work is about to stop because it cannot obtain the permit to operate and has been waiting for an MIA for a year and a half, although he declined to reveal the name because it is a sensitive topic.

"The jobs at risk from that particular project are around 200, plus the entire chain of local and external suppliers," he added.

García said in his presentation that both the current and previous governments have shown "total ignorance of the importance of the mining sector," not only because of the employment it generates in places where there are no other options, but because everything that is used in everyday life comes from some product from mines.

José Martín Cervantes, project manager at Grupo Minero Diflor, which has operations in Chihuahua, said the sector already suffered from many delays in the approval of procedures at the public mining registry.

“We had been hit by a string of cases of non-coordination, of non-monitoring by the authorities, of unfinished, archived procedures. The decisive point is that there was no incentive or intention on the part of the authorities to fix it,” he said.

MINISTRY CHANGE

Karla Schiaffino, a senior analyst at Control Risk, said during her presentation at the event that, in addition to ignorance of the industry, what mining companies face when carrying out procedures is the "strong nationalist component this government has" and the impact of administrative changes such as eliminating in 2020 the mining department at the economy ministry.

“What there is is a great inability and a lack of resources in the agencies that now have to process these procedures to speed them up. This slowdown... comes from the ideological discourse, but also from the lack of capacity of these agencies," said the consultant.

“When they moved all the mining personnel [in the ministry], those problems we had before were exacerbated. Now, there’s no one with a background on how to follow the procedures, which were left pending, how to deal with new ones, what the legislation is, the rules and, even, they make the SAT [revenue service] collect taxes directly,” said Cervantes.

Rueda said one of the strategies that can work at this time to expedite obtaining procedures is to approach state governments and not the federal government in the first instance. “Make them see as part of this industry that it’s important, that it generates taxes, economic benefits for the community, that it brings a lot of investment for the states,” he said.

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