Mexico City, April 10. The Moody’s agency warned on Monday of risks for the mining industry in Mexico due to the reforms promoted by the president, Andrés Manuel López Obrador, to restrict concessions.
“If approved as proposed, the changes will be credit negative for the mining sector, which would increase the regulatory burden on producers and raise the risk of early termination of their current concessions,” said a Moody’s Investors Service report. .
The report referred to the reform that López Obrador proposed on March 28 to the Mining Law, which would now only grant mining concessions through public tender and with prior consultation with indigenous peoples, in addition to shortening its duration from the current 50 years to 15 with the possibility of only one extension.
In addition, Moody’s warned of another reform that would allow the government to unilaterally withdraw concessions or permits in mining and any sector only on the grounds that they affect the “public interest.”
“This is particularly negative for any future investment looking to take advantage of nearshoring trends,” the report said.
Moody’s trusted that the Government will discuss the reforms before approving them, since mining represents 2.5% of the gross domestic product (GDP) in Mexico.
He also cited that Mexico is the world’s largest producer of silver, the second largest producer of fluorspar and one of the top 10 producers of zinc, gold and copper.
Mining, the report added, generated about $3.1 billion in tax benefits in 2021 and companies invested a combined $5 billion in 2022.
“The proposed conditions could discourage mining companies from making future investments in Mexico and looking the other way. We expect mining producers, whose operations contribute substantially to Mexico’s economy, to discuss the proposals with the government,” Moody’s said. .
During the Government of López Obrador, the territory granted to mining companies has decreased from 10.64% to 8.59% of the country, which implies about 24,000 concessions, according to the Ministry of Environment and Natural Resources (Semarnat).
