Mexico agrees increased mining tax despite company threats
Published by MAC on 2013-11-02Source: Mining.com, Reuters
Mexico has joined a growing list of countries revising their mining laws to ensure a larger return from the mining industry, in the face of concerted corporate lobbying.
Mexico mining tax approved, but hits political roadblock
Cecilia Jamasmie
Mining.com
31 October 2013
Mexico's senate approved by 73 votes to 50 the broad outline of a package of tax reforms, which included a debated 7.5% charge on resource companies, and as much as 8% for gold, silver and platinum.
The lawmakers, however, decided to set aside scores of divisive sections to be processed later.
Members of the National Action Party (PAN), the main opposition party, expressed their discontent with the decision by abandoning the session as the Senate began to work through the reservations, reports CNN Mexico.
They claim the taxes will see investment in the country's mining sector drop off dramatically, with major companies such as Canada's Goldcorp and Grupo Mexico warning they may need to take their money somewhere else.
Despite the senate tensions, the tax package was expected to be finalized later Wednesday or at some point today. Following senate approval the reforms only need to be enacted by President Enrique Peña Nieto to become a law.
"Mexico is completely pricing itself out of the market," says Rosalind Wilson, head of the Canadian Chamber of Commerce's mining task-force in Mexico. In an interview with The Economist, she noted that last year the country took 53% of the $1.9 billion raised on the TSX and its junior twin to finance mining in Latin America. In the first eight months of this year, the figure had fallen to 17%.
About 334,000 people work in Mexico's mining sector, and more than 2 million are indirectly employed by it, which makes it the country's fourth largest industry in dollar income, only behind cars, oil and electronics.
Mexico lawmakers firm on mining royalty plan
David Alire Garcia
Reuters
29 October 2013
MEXICO CITY - Canada's top mining lobby said on Monday that Mexican lawmakers remain "firm" on approving a system of mining royalty payments, despite the industry's best efforts to lower a levy that companies say will deter investment.
Mexico's lower house of Congress approved the new 7.5 percent mining royalty on earnings before interest, taxes, depreciation and amortization earlier this month as part of a plan to bolster the country's feeble tax haul. The Senate must vote on the wider bill by the end of this week.
"What I'm hearing is not what I'd like to hear," Rosalind Wilson, president of the Canadian Chamber of Commerce's mining task force, said in a telephone interview.
"We are hearing that they are fairly firm," added Wilson, who said she had met with "dozens" of lawmakers since the royalty was proposed in April.
The royalty proposal is part of a fiscal reform plan by President Enrique Pena Nieto that focuses on reaping more income tax from high earners, closing corporate loopholes and widening the tax base.
But Wilson, whose group represents about 60 firms that dominate Mexico's mining sector, said she was still holding out hope that lawmakers would reconsider and lower the planned royalty rate.
Mining companies threatened to cut investment in Mexico after the government proposed the royalty, arguing that lower metal prices, rising running costs and higher taxes reduce the country's investment allure.
(Reporting by David Alire Garcia; Editing by Simon Gardner and Kenneth Maxwell)
Top miners operating in Mexico to leave if 7.5% tax approved
Cecilia Jamasmie
Mining.com
28 October 2013
Goldcorp and Grupo Mexico, two of the largest miners operating in Mexico, are warning they may need to take billions of dollars in planned investments to other markets if proposed new taxes on resource companies are approved.
Both companies expressed last week that President Enrique Peña Nieto's plans to reap more income tax from the mining sector's higher earners, through a proposed 7.5% tax on resource companies, and as much as 8% for gold, silver and platinum, would likely forced them to rethink their future in Mexico.
Delivering its Q3 results Monday, Grupo Mexico, whose 80% owned Southern Copper is the country's No. 1 biggest copper producer, warned investor that if the senate approves the new taxes, the company "would be forced to redirect" close to $5.4 billion of planned investment to other countries including Canada, the U.S., Chile and Peru.
And last week, Canadian Goldcorp also said that if Mexico approves its proposed royalties on mining companies, it will likely have to readdress investments in the country, especially if it can't get the returns it wants.
Meanwhile, Mexican miners would see their total duties jump up to 57% if the levies are approved, according to the country's president of the country's mining chamber Camimex, Sergio Almazán.
In an interview with local paper Milenio, he also said the chamber estimates that total investment in the sector would fall over 50%, from the currently projected $30 billion to less than $12 billion in the next five years.
About 334,000 people work in Mexico's mining sector, and more than 2 million are indirectly employed by it, which makes it the country's fourth largest industry in dollar income, only behind cars, oil and electronics.
If approved by the senate, the new mining tax will be implemented as early as January 2014.