Mining in Mexico, an Activity of Speculation and Dispossession

Teresa Cedillo Nolasco

In Mexico there are at least 15 mining municipalities of world importance; nevertheless, this activity has not contributed to the wellbeing of the communities nor has it generated public resources for the country, because it is not designed to benefit the workers or the populations where it is developed, but rather “it is about practices monopolized by world class companies that fight through speculation and dispossession,” said Dr. Aleida Azamar Alonso, researcher at the Metropolitan Autonomous University (UAM).

In the book Así se Ve la Minería en México -published by the Casa Abierta al Tiempo, the Academic Observatory for Society, and Institutions and OXFAM México, among other organizations- the professor from the Xochimilco Unit carries out a normative and statistical analysis in which she points out that the expansion of this activity in Mexico in this century is the result of legislative reforms in the 1990s, when the Regulatory Law of Article 27 of the Constitution on the Exploitation and Use of Mineral Resources of 1975 was repealed to establish the Mining Law of 1992.

This process, the academic from the Department of Economic Production of the Xochimilco Unit stated, notably modified the scope of action that the Mexican State had to intervene or regulate the sector, since the interest was to make the norms more flexible in order to attract investment in this field.

Among the differences that the specialist identifies between the 1975 and 1992 laws, the one related to the nature of capital stands out, since articles 8 and 12 of the former refer to and differentiate the limits of foreign participation, which cannot be greater than 49 percent in any case; while in the latter, articles 10 and 11 only require that they be companies incorporated under Mexican law, regardless of their origin.

Regarding the duration, Article 33 of the first law states that the concessions for exploration will be valid for three years, which can be extended for three more, and in Article 34, for 25 years, which can be deferred for another 25 years. In the second law, the concessions shall have a duration of 50 years, extendable for another 50 years, practically 100 years, she pointed out.

In relation to the territorial surface, the 1975 law establishes in article 33 that the exploration has a maximum of 50 thousand hectares that after the expiration of the permit must not exceed what is dictated in article 35. Likewise, articles 34 and 35 indicate that each concession covers a single lot of 500 hectares, and that as a whole no more than five thousand hectares can be exploited. In the 1992 Law, the territorial area is undefined.

As a result of strong corporatist lobbying in the run-up to the signing of the North American Free Trade Agreement, the new law was enacted in 1992, despite the fact that it had several inconsistencies with the Constitution, among them article six, which states that mining is an activity of public utility and has preference over any other, which violates the self-determination rights of the communities, says the researcher.

The PhD in International Economics and Development from the Complutense University of Madrid explains that in the 1990s a process known as the extractivist boom began, as a result of political and economic pressures from the United States and European nations to countries in Latin America, Africa and Central Asia, a process characterized by the intensive increase of investment flows for the development of projects of this type in areas where this operation had little or no presence.

In the country, this process took place at the end of the decade, with a sustained increase in mining concessions, with an important surge in the first decade of this century, when millions of hectares were made available for exploration and exploitation.

Proof of this is that in the past six governments, 48,938 thousand 938 hectares were granted concessions under Miguel de la Madrid; 439,928 under Carlos Salinas; 992,783 under Ernesto Zedillo; 7,998,834 under Vicente Fox; 21,523,828 under Felipe Calderón and 4,169,584 under Enrique Peña Nieto; a total of 35 million 173,895 hectares were granted concessions.

The boom in extractivism is also the result of the so-called commodities super cycle, during the period from 2003 to 2012, when the booming demand for raw materials by China favored a spike in the prices of minerals and other raw materials.

As a result, more than 11 percent of Mexican territory is currently under concession for these activities, an extension similar to that of the state of Chihuahua, the largest in the country.

This context also favored super concentration in the sector, since as of 2018, 10 percent of the concessioned lands were controlled by Altos Hornos de México; 9.2 percent, by Grupo Peñoles; three percent, by Minera Frisco; 1.9 percent, by Grupo México, while the only two companies involved in smelting and refining primary gold are Grupo México and Industrias Peñoles.

Foreign companies, particularly Canadian, dominate the rest of Mexican mining, accounting for more than 70 percent of the productive hectares and close to 90 percent of the projects in the production phase.

The income to the treasury derived from this practice is more symbolic or in some cases nil, since even though it is considered an essential task for the country’s economy and that basic inputs for goods and services, including medicines, are obtained from it, it cannot be ignored that the income of the principal groups in the sector is enormous.

Grupo Mexico’s net profit in its mining division alone was 1.355 billion dollars (28 billion pesos, on average) with a 54 percent growth in the profit on its shares, according to data from the company itself in 2019; in contrast, the tax revenue obtained by the Mexican State was barely 17 billion pesos.

The researcher concludes that large-scale mining has not contributed to the wellbeing of communities nor has it generated public resources for the country; instead, it has caused damage in various areas, especially social and environmental, as shown by the accidents that have occurred in various parts of the country, affecting flora, fauna and, in some cases, claiming human lives. In addition, there has been an increase in violence and organized crime in the regions where the projects are located.

Original article published in Desinformémonos on July 12, 2023.
English translation by Schools for Chiapas.

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