US warns Mexico that Vulcan case might have negative effects on FDI

A possible expropriation of the land Virginia-based miner Vulcan Materials owns in Mexico's Quintana Roo state would affect FDI, US Secretary of State Antony Blinken said, as bilateral tensions over the company's limestone deposit and deepwater port are growing.

During a hearing before the US Senate Foreign Relations Committee on Tuesday, senator Tim Kaine (D-VA) told Blinken that Vulcan Materials owns Punta Venado port and land in Mexico which, Kaine said, President Andrés Manuel López Obrador has tried to expropriate on two occasions, and which is why his intervention was requested.

“I think this is subject to an arbitration procedure at this time,” Blinken responded, adding that, in any case, “we have raised the point generically with the government of Mexico, including the president, that the confiscation of private companies is not a good way to attract investment.”

After Blinken's statements were reported in Mexican media, López Obrador responded during his daily press conference on Wednesday that his impression was that Blinken does not know exactly what the issue with Vulcan is about.

“The only thing he managed to tell them was that those attitudes or those supposed actions on our part affected investment… that it was not a good way to bring in investment. Of course, we do not want to attract investment at any price, much less for investment to come and destroy our territory. No, it's better that they don't come or that they go somewhere else then,” he said, adding that the case does not involve expropriation.

“We are not expropriating. It is a closure because we cannot stand by with our arms crossed when the law is being violated in our country and our territory is being destroyed,” he said and claimed the company has violated an order to suspend operations.

Last week, four US senators, including Kaine, sent a letter to the Mexican foreign ministry, warning that they were considering using “all available resources” if operations remain paralyzed.

Operations have been stopped since May 2022, when López Obrador ordered the immediate closure of Vulcan's quarries, alleging its subsidiary SAC TUN (formerly Calica), was illegally extracting and exporting limestone. Vulcan denied wrongdoing and said it has the permits to operate.

On Wednesday, López Obrador also said the company is seeking compensation of more than US$1.5bn before the World Bank's International Centre for Settlement of Investment Disputes (ICSID), and that about six months ago some judges inspected most of the 1,500ha in judicial dispute. A ruling is expected for August.

“It is an international resolution. What I maintain is that it would be an aberration to allow ourselves to continue destroying the territory with a base of materials to build roads in the United States,” López Obrador added.

On March 14, 2023, police and navy troops occupied Vulcan's facilities in Punta Venado, near Playa del Carmen. One week later, the company reported that the police, also accompanied by navy troops, forcibly entered the dock.

Additionally, López Obrador has threatened to convert the property into a protected natural area.