On 15 November 2018, a Bill of Law was introduced to the Chamber of Deputies (Mexico’s House of Representatives) amending the Mining Law, that intends to include new topics in the area of social impacts for mining exploitation activities.
Among the proposed additions, are the following:
- Grant a mandate to the Ministry of Economy to declare not viable exploitation zones that are undergoing conflicts due to negative social impacts (this being an exception to the free property);
- Grant a mandate to the Mexican Geological Service to carry out social impact studies in mining exploitation zones;
- The following provisions would be applicable to every mining concession or zone incorporated into mining reserves:
- Prior to the issuance of a concession title, a social impact study would have to be carried out by the Mexican Geological Service;
- Introduction of a procedure for the prior, free and informed consultation with indigenous communities and townships, by the Ministry of Economy and the Mexican Geological Service in order to achieve community agreements and consents;
- The Ministry of Economy must inform a concession holder of the presence of vulnerable social groups where the activity will be carried out, for the implementation of mechanisms to protect rights.
- Minimal economic amounts may be foreseen as well as rules that a concession holder must destine towards human and sustainable development in communities where the mining activity will be carried out.
- Concession holders will be required to provide an annual report to the Mexican Geological Service on the social impacts caused by their activities as well as on the mitigation measures and social outreach activities.
- Mining concessions may be cancelled as a result of the following:
- Failure to provide the annual report to the Mexican Geological Service;
- Failure to carry out mitigation measures and social outreach activities;
- Failure to destine minimal economic amounts for human and sustainable development in communities where the mining activity will be carried out.
On 20 November 2018, the Bill was sent to the Mining and Regional Development Commissions as well as to the Legislative Studies Commission for their evaluation.
Special attention should be given to the new attributions of the Mexican Geological Service and the Ministry of Economy with respect to the requirement of carrying out prior consultations and studies, as well as to the possibility of having concessions cancelled. Should these attributions be approved, we are of the opinion that rights already granted to mining concession holders may be affected, aside from a violation to the principle that prohibits the retroactive application of a law in detriment of an individual or a company and the principle of legal security.
At Baker McKenzie we have developed a legal strategy to protect the rights of mining concession holders. if you need additional advice on the scope of this Bill of law as well as to resolve any other related issue, please do not hesitate to contact us.