On April 28, 2023, the Mexican Senate approved the Decree amending, adding and revoking several provisions of the Mining Law, the National Waters Law, the General Law of Ecological Balance and Environmental Protection and the General Law for the Prevention and Comprehensive Management of Wastes, regarding mining concessions (the "Decree").
Modifications to the Mining Law
- Mining activity is no longer considered a priority activity, which translates into: (i) a prohibition on the granting of concessions in protected natural areas, where such activities put the population at risk and where there is no water availability; (ii) the elimination of the possibility of expropriating land where mining activities are intended to be carried out; (iii) the obligation to enter into agreements between the concession holders and the owners of the land where the activity is intended to be carried out in order to obtain the respective use permit, agreeing on a consideration of at least 5% of the amount resulting from the reduction of the income tax result and the amounts covered by the concession holder for non-deductible contributions, among others.
- It establishes the obligation to carry out prior, free, informed, culturally appropriate and good faith consultation processes to obtain the consent of indigenous and Afro-Mexican communities, in the event that such communities are identified in the lots where mining activity is intended to be carried out. Such consultation will be carried out directly by the competent authority, but its cost must be covered by the concessionaire.
- The procedures to obtain mining concessions will be carried out through a governmental bidding process. Once a favorable decision is obtained, the concessionaire must obtain: (i) Social Impact Authorization; (ii) Authorization of the Mine Closure Plan and the Restoration, Closure and Post-Closure Program; (iii) the Concession Title for the Use of National Waters specifically for industrial use in mining; (iv) a guarantee to respond for possible damages; and (v) other authorizations in other areas of the Law that may be required; in all cases, before the Mining Concession Title is handed over to the concessionaire.
- Concessions shall be issued only for minerals or substances to be explored or exploited, but not by area. If non-concessioned substances are identified, the concession title may be modified to include them.
- The term of the mining concessions is reduced from 50 to 30 years, within which the first 5 years will be used for the preparation of the land where the mining activity will be carried out. Also, the term will be extendable only once and for no more than 25 years and must be requested between two and one year prior to the end of its term.
- The transfer of concessions requires authorization from the Ministry of Economy.
- Additional obligations of successive tract are foreseen, such as submitting annual reports of works and works of benefit, notifying the beginning of activities, giving notice of accidents, among others.
Modifications to the National Waters Law
- Industrial use in mining is created for the exploitation of national waters, including working waters (aguas de laboreo). Additional obligations are also established for the concessionaires of this use, including: (i) submitting the positive ruling of the mining concession bidding for water allocation; (ii) measuring exploited volumes with respect to working waters (aguas de laboreo); and (iii) submitting monthly reports of daily consumption measurements, among others.
- In case of risk of water availability, the volumes of water granted in concession may be cancelled or decreased.
- The transfer of the water rights for any other use volumes to industrial use in mining, is prohibited.
- Concessions for mining use will be valid for 30 years, extendable for 25 additional years, provided that the mining concession is still in force.
Modifications to the General Law of Ecological Balance and Environmental Protection
Mining concessionaires must prepare and implement a Restoration, Closure and Post-Closure Program, which shall be submitted before the Ministry of Environment and Natural Resources (the "SEMARNAT") for approval. However, the Law refers the terms under which such program must be prepared to the Regulations.
Modifications to the General Law for the Prevention and Integral Management of Waste
- Grants SEMARNAT the power to control mining and metallurgical wastes that are subject to management plans.
- Subjects mining and metallurgical wastes to management plans and establishes the obligation to register such wastes before SEMARNAT, having to have verifiable evidence that such wastes are managed and disposed of in accordance with the applicable legislation.
- The classification of a waste as mining or metallurgical, must be established in the Mexican Official standards that specify the way to determine its characteristics, that include the lists of the same and set the concentration limits of the substances contained in them.
Transitory Articles
- Mining exploration and exploitation concessions issued prior to the publication of the Decree shall remain in force.
- Holders of water concessions that carry out mining exploration and exploitation activities shall have 90 calendar days to request the modification of such concessions from industrial use to industrial use in mining.
- Within 365 calendar days after the publication of the Decree, the current mining concessionaires must submit before the Ministry of Economy: (i) the guarantee; and (ii) the authorization of their Restoration, Closure and Post-Closure Program.
Next Steps
It is expected that the Federal Executive will publish the Decree shortly and it will enter into force the following day; therefore, the current concessionaires must comply with the provisions of the transitory articles and comply with the new provisions for new mining concessions or for the use of national waters. In the event that mining concessionaires are affected, they have 30 business days after the date of its entry into force to challenge it through an amparo lawsuit, in the event that the effect of the entry into force of the new law is such that it affects them. In turn, such lawsuit may be filed within 15 days after the date on which an enforcement act has been generated.
Hogan Lovells has a multidisciplinary team of specialists to review, determine impacts, establish and implement compliance actions or to challenge the provisions of the Decree, as the case may be.
Authored by Mauricio Llamas, Mauricio Villegas, Sofía de Llano, and Santiago Contró.
