Mexico ties ESG policymaking to pause on new mining concessions

Kip Keen

S&P Global Market Intelligence

19 August 2019

Before Mexico reverses a new policy to stop issuing new mining concessions, its government wants to ensure existing ones are actively operated, review a backlog of claim applications and implement policies on indigenous consultation, Francisco Quiroga, Mexico's undersecretary of mining, told S&P Global Market Intelligence in an Aug. 19 interview.

Mexican President Andrés Manuel López Obrador recently said the country would no longer issue new mining claims, while also promising not to cancel existing concessions. The policy came as a surprise to miners and explorers and, with few details to go by, raised questions over what it means for the mining sector in a country that attracts a significant share of global exploration spending and is a major metal producer.

Echoing the president's position, Quiroga said miners and explorers that are active on their claims "have nothing to worry about" but that Mexico will hold off issuing new mining concessions for an unspecified period of time. Quiroga tied the decision to operational inactivity on claims, an issue López Obrador raised on Aug. 11, as well as ongoing policymaking over consultation with indigenous people.

"Right now most of the concessions are not being exploited; are not operating," Quiroga said. "This is the real issue that the president is addressing."

Quiroga said the government is focused on reviewing inactive claims while also developing indigenous consultation policy and clearing a backlog of existing applications for mineral claims. "We need to make sure, first, the concessions that are already given are really operating," he said. "We think that it would be irresponsible, if most of the concessions are not operating, [to] give more concessions."

He also said the government was reviewing a backlog of 21,000 applications for new claims in Mexico, compared to about 25,000 that have been issued. About 94% of the applications have been reviewed at some level, according to the official.

Indigenous consultation process

In the interview, Quiroga stressed the development of indigenous consultation policies, in line with the International Labor Organization's Indigenous and Tribal Peoples Convention, or ILO 169, as a first step for Mexico before it starts approving new concessions. López Obrador, a leftist politician that swept to power last year, campaigned on improving life for poor people and has stressed the need for greater consultation with indigenous groups before projects go ahead.

Quiroga said the policy initiative was moving forward "in a way that doesn't disrupt any operations or the process of investment."

The focus on ILO 169, which Mexico ratified decades ago, would not necessarily require new legislation, he said. If policies can be enacted more quickly through executive order or other methods, that will be the government's preference, Quiroga said, noting Mexico's Secretariat of Economy has published guidelines on its website about indigenous consultations in the mining sector. They are open for public comment.

"We don't want to give ... a concession title that can be challenged in the court of law," he said. "We're working ... to address that issue so that whatever title we issue cannot be contested because it didn't address ILO 169."

The Mexican government does not have a timeline for how long it will take to normalize the process to acquire new mining concessions, he said.

"It will depend on how quickly we can implement ILO 169," Quiroga said.