Mining 2025 Comparisons

The mining industry in Mexico has long been a cornerstone of the country’s economy and continues to play a pivotal role in its development. Mexico boasts a remarkable diversity of mineral resources spread across its national territory, including silver, gold, copper, zinc, lead, fluorite, manganese, barite, and more. This vast array of resources significantly strengthens the industry.

Mexico’s potential for mining is rooted in its rich and diverse geology, which has resulted in extensive mineral deposits. The country is also home to a skilled and dedicated workforce, further bolstering its position as a mining powerhouse.

With a heritage dating back to pre-Hispanic times and a major boom during the 16th century, Mexico has established itself as the world’s leading producer of silver. In the 21st century, the sector has experienced unprecedented levels of investment, leading to the emergence of numerous new companies and projects. This growth has driven the adoption of a new governance model emphasising social responsibility, transparency, and collaboration among stakeholders.

According to the Ministry of Economy, Mexico remains the world’s leading producer of silver and ranks among the top producers of metals such as gold, copper, and lead. Mining production has been an integral part of the Mexican economy for generations. Specifically, the mining-metallurgical sector contributes 2.05% of the GDP, as reported by the National Institute of Statistics and Geography, generating substantial income and employment across various regions.

Mexico’s mining industry continues to attract significant foreign investment, with global mining companies establishing operations to capitalise on the country’s abundant mineral reserves and favourable business opportunities. This influx of investment has driven the sector’s continued development, creating jobs and strengthening production chains.

An essential aspect of this growth is the evolving relationship between mining companies and local communities. Recent legal reforms have notably impacted these dynamics, particularly through the requirement for public consultations before granting new mining concessions. These measures aim to ensure greater community involvement and transparency in the mining process.

Mexico’s legal system is based on civil law, and the primary sources of Mexican mining legislation are outlined below.

Constitution of the United Mexican States

Mining activities in Mexico are regulated under Article 27 of the Mexican Constitution, which declares that all natural resources, including minerals, are the property of the Nation. Private entities may conduct mining activities, under specific conditions and regulations established by law, primarily through a system of mining concessions.

The government retains exclusive rights over certain activities, including the exploration and exploitation of oil, radioactive minerals, lithium, and solid, liquid, or gaseous hydrocarbons. These resources are not subject to concessions, as their management remains under strict government control.

Mining Law

Recent amendments to Mexico’s mining legislation

In May 2023, significant amendments were made to the Mining Law, National Waters Law, and related environmental legislation, introducing stricter regulations to enhance environmental protection and promote sustainable resource management. These reforms, however, have sparked numerous amparo lawsuits (constitutional appeals) from companies and individuals in the sector. Plaintiffs argue that the amendments infringe upon acquired rights, the principles of legality, and the right to legal certainty. The resulting uncertainty has disrupted the sector, creating economic and labour risks.

In response to the numerous constitutional lawsuits and initial contradictory judgments thereto, the Supreme Court of Justice of the Nation (SCJN) issued General Agreement No 3/2024, instructing courts to delay rulings on amparo lawsuits and appeals related to the reforms. The SCJN will ultimately decide the constitutionality of these amendments, though a ruling is still pending.

Key provisions of the New Mining Law

The Mining Law establishes the framework for the exploration, exploitation, and management of mineral resources, including the process for granting mining concessions. Key elements are described below.

Exploration activities

Exploration and prospecting activities in new concession zones are exclusively managed by the Mexican Geological Survey (Servicio Geológico Mexicano). These activities are initiated through exploration orders published in the Mexican Official Gazette.

Private entities may request the Ministry of Economy to authorise exploration in a specific area where they possess information on potential mineral deposits. In such cases, the Mexican Geological Survey may enter into collaboration agreements with the requesting party to conduct exploration activities.

The requesting party has the right to be granted the new mining concession once the public bidding process is completed, provided that (i) they meet the requirements to qualify as a mining concession holder under the new Mining Law, and (ii) their economic proposal in favour of the Mexican State is at least 90% of the highest bid submitted during the process.

Concessions and public bidding

Concessions are awarded through public bidding to ensure the Mexican state secures the best economic consideration. Holders of existing concessions may receive preferential rights over adjacent areas if they match the highest economic proposal.

New mining concessions term

Under the new Mining Law, the term of mining concessions has been reduced from 50 years to 30 years. These concessions are extendable for an additional 25 years. Following this extension, a second 25-year renewal may be granted, but only through a public bidding process. In such cases, the original concessionaire will have a preferential right to match the highest bid.

The first five years of a new mining concession are designated exclusively for pre-operative activities, and this period cannot be extended.

Social and environmental requirements

Concession holders must fulfil several obligations:

• conduct social impact studies and implement restoration, closure, and post-closure plans;
• provide financial guarantees (eg, deposits or trusts) to support mitigation and compensation measures;
• obtain and report federal authorisations, including environmental, labour, and energy permits; and
• conduct prior, free, and informed consultations with indigenous and Afro-Mexican communities in affected areas.

Community rights and benefits

Indigenous and Afro-Mexican communities residing on concession land, where applicable, are given priority to match the most competitive economic proposal for concessions. Additionally, concession recipients must:

• sign agreements for land-use permits; and
• pay at least 5% of mining profits to the affected communities, a requirement now codified by law.

Water availability

Mining concessions are contingent on obtaining national water concessions for mining purposes.

Public consultations

Public consultations must align with environmental impact authorisations and include information from social impact studies. These consultations are simultaneous but occur after concession awards, with applicants covering their costs in advance.

Legal challenges and uncertainty

Despite the new Mining Law’s current validity, it faces ongoing appeals in the SCJN. If the court rules against the reforms, the previous Mining Law will be reinstated, further contributing to the uncertainty affecting the sector.

It is important to note that concessions granted prior to the implementation of the new Mining Law will, in the first instance, remain unaffected by its changes.

Regulations to the Mining Law

The Regulation of the Mining Law provides detailed guidance on the implementation of the Mining Law. It specifies the procedures for applying for concessions, conducting exploration and exploitation activities, fulfilling concession holders’ obligations, and defining the authorities’ roles and responsibilities, among other operational and administrative matters.

Following the enactment of the new Mining Law, new Regulations consistent with its provisions are expected to be issued. However, as of the date hereof, the new Regulations have not yet been enacted, and the previous Regulations, aligned with the former Mining Law, remain in force.

The General Law of Ecological Balance and Environmental Protection

This law contains provisions that affect the mining industry, especially with respect to environmental impact assessment and waste management.

Agrarian Law

In Mexico we have private property and “ejido” land. “Ejido” land refers to a system of communal land ownership, established as part of agrarian reforms after the Mexican Revolution. Ejido land is owned collectively by a group of people, typically farmers or indigenous communities, and is primarily used for agriculture. While individuals or families have the right to work specific plots, the land cannot be sold or transferred without community and government approval. The system aims to ensure equitable access to land and promote sustainable farming practices.

The Agrarian Law regulates legal relations related to land ownership and possession of “Ejido” land, as well as agreements with local communities to obtain and/operate concessions.

Foreign Investment Law

This law establishes the conditions under which foreign investors may participate in the mining sector.

Specific Environmental Regulations for the Mining Industry

There are specific regulations issued by the Ministry of Environment and Natural Resources that regulate environmental aspects of mining activities, such as waste management, pollution prevention and restoration of affected areas.

In Mexico, all natural resources, including minerals, are constitutionally owned by the Mexican Nation and managed by the State. To facilitate their extraction and use, the government employs a concession system, which grants legal entities or individuals the right to conduct mining activities. These concessions come with specific legal obligations and regulatory frameworks.

Key Points about Mining Concessions

• Exploitation rights: concessions provide the right to exploit underground resources such as minerals, but they do not automatically grant ownership of the land itself.
• Surface v subsurface rights:
1. Mining concessions govern subsurface rights, focusing on the extraction of minerals.
2. Surface rights refer to the ownership or use of the land at ground level. These must be negotiated with the landowners, whether they are private individuals, ejido communities, or other entities.
3. Mining concessions are issued, maintained, and transferred independently of surface rights. This means concession holders must secure separate agreements to access and use the surface land for their mining operations.

Under Mexican law, mineral resources are the property of the nation, and the state has exclusive control over their use. Mining activities by private parties are permitted only through mining concessions issued by the federal executive, via the Ministry of Economy, in accordance with the Mexican Mining Law and its regulations. This framework ensures that the state acts as both a grantor and regulator of mining rights.

Key Aspects of the Mexican Mining Legal Framework

Scope of mining concessions

• Concessions grant rights to exploit and extract mineral resources but do not convey ownership or surface land rights.
• Surface rights must be negotiated separately with landowners or communities.

Exclusions

• Certain resources, including oil, hydrocarbons, lithium, radioactive minerals, and liquid or gaseous substances, are excluded from concessions and remain strictly under state control.

Regulatory administration

• The Ministry of Economy, through the Mining Authority, oversees the issuance, administration, and enforcement of mining concessions.
• Other governmental entities regulate related aspects of mining activities:
1. Ministry of Environment and Natural Resources (SEMARNAT): Environmental permits and regulations;
2. National Water Commission (CONAGUA): Water usage and rights;
3. Ministry of National Defence (SEDENA): Use of explosives and related security measures;
4. Ministry of Labour and Social Security (STPS): Labour conditions and worker safety; and
5. Ministry of Agrarian, Territorial, and Urban Development (SEDATU): Land use and territorial planning.

Under Mexican law, mineral resources belong to the nation, and mining concessions grant private parties the right to exploit these resources but not ownership or rights over the surface land where the concessions are located.

Legal Framework and Regulations

Constitutional basis

• Article 27 of the Political Constitution of the United Mexican States establishes that all land, waters, and minerals within Mexican territory belong to the state. Their use by private entities is allowed only through concessions granted by the Federal Executive via the Ministry of Economy, in accordance with the Mexican Mining Law and its regulations.
• Certain resources, such as oil, hydrocarbons, lithium, liquid or gaseous minerals, and radioactive materials, are excluded from private concessions and remain exclusively managed by the state.

Mining concessions

• Scope: Concessions allow the exploitation of underground mineral resources and are distinct from surface land rights, which must be negotiated separately.
• Transferability: Mining concessions can be transferred or encumbered under the Mining Law, subject to regulatory approval.
• Prior Approval for Transfer:
1. The Ministry of Economy must approve any transfer of mining concessions.
2. The acquirer must demonstrate compliance with legal requirements to qualify as a mining concession holder.
• Security Interests: Concession holders may use their mining rights as collateral for securing obligations, provided:
• the concession pertains to an operating mine; and
• the beneficiary of the lien or security interest agrees to comply with the requirements to hold a mining concession within six months after enforcing the lien or transfers the rights to a qualified holder.

Under Article 27 of the Political Constitution of the United Mexican States, all lands, waters, and natural resources in Mexico, including minerals, are the property of the Mexican state. Private parties may only use and exploit these resources through mining concessions granted by the federal executive, via the Ministry of Economy, in accordance with the Mexican Mining Law and its regulations.

It is important to note that the rights of a mining concession come from an administrative act issued by the competent federal authority, which must observe the Mining Law that establishes the requirements, procedures and conditions to obtain, operate and maintain mining concessions.

In addition to federal mining concessions, mining companies must secure state and municipal permits for operational aspects of the mining project, such as construction and land issues and, in some cases, environmental local policies.

Mining Concessions in Mexico

In Mexico, mining concessions are governed by a robust legal framework that establishes conditions for their acquisition and maintenance. The Mining Authority, operating under the Ministry of Economy, administers these concessions. The Mining Law outlines the principles and processes for the exploration, exploitation, and management of mineral resources.

Role of the Mining Authority

The Mining Authority is tasked with ensuring legal security for the mining industry by enforcing regulations and monitoring compliance. Its overarching goal is to encourage investment in the sector to drive economic development while balancing the interests of all stakeholders.

Granting Mining Concessions

Mining concessions are awarded through a public bidding process designed to ensure the Mexican state receives the best possible consideration. The process is governed by specific conditions, including:

• Technical, legal, and financial requirements: applicants must demonstrate technical, legal, economic, and administrative capacity.
• Social and environmental obligations:
1. conduct a social impact study and implement a programme of restoration, closure, and post-closure of mines;
2. provide financial guarantees (eg, deposits, insurance, or trusts) to address the social impact study’s recommendations;
3. obtain environmental, labour, energy, social, and other federal authorisations, which must be reported to the Mining Authority;
4. conduct prior, free, and informed consultations with indigenous and Afro-Mexican communities in the area; and
5. specify the minerals or substances to be exploited.

Concession Duration and Renewal

• Initial term: concessions are granted for 30 years.
• First extension: a 25-year extension is available.
• Second extension: an additional 25-year period may be granted through a public bidding process, where the original concessionaire holds a preferential right to match the highest bid.
• Pre-operative period: the first five years of a new concession are designated for pre-operative activities, with no possibility of extension.

Maintenance of Mining Concessions

To maintain concessions, holders must:

• submit annual reports detailing activities and discovered resources;
• pay fees to the state for holding the concession; and
• conduct works and activities on the concession and file assessment work reports.

Concessionaires may request that the Mining Authority suspend activities once, for up to three years, if they provide evidence that work was impossible due to technical, economic, employment, judicial, or force majeure reasons. The Ministry must be notified within ten working days of the suspension.

Transfer of Mining Concessions

Transferring a mining concession requires prior approval from the Ministry of Economy. Approval is granted if the acquiring party demonstrates compliance with the requirements for being a concession holder.

Concession holders may grant liens or security interests over their mining rights to secure obligations, provided the concession relates to an operating mine. Additionally, within six months of enforcing the lien, the beneficiary of the lien or security interest must either meet the requirements to hold a mining concession or transfer the rights to a qualified holder.

Causes for Cancellation

Concessions may be cancelled generally due to:

• not making timely payments of the corresponding contributions for two consecutive fiscal years;
• not submitting the reports required by the Mining Law and its Regulations for two consecutive years or five non-consecutive years;
• not starting the corresponding work within one year from the concession’s effective date or failing to carry out the activities covered by the concession for two consecutive years;
• not submitting the Mine Closure Plan to the Ministry of Economy within two years and up to one year before the closure of operations;
• not having a valid water concession for industrial use in mining; or
• the presence of an imminent risk of ecological imbalance, irreversible damage or deterioration to natural resources, cases of contamination with hazardous repercussions for ecosystems, their components, surface or underground hydrological systems, or public health, in accordance with applicable provisions in the field.

Environmental Framework for the Mining Industry in Mexico

The General Law of Ecological Balance and Environmental Protection serves as the cornerstone of environmental legislation affecting the mining industry in Mexico. This law establishes general principles and norms, guiding the issuance of state-specific environmental regulations. It addresses critical topics such as environmental impact assessments, waste management, biodiversity protection, and citizen participation in environmental matters.

Additionally, the Environmental Impact Law and its regulations govern the environmental impact assessment process for projects with potential environmental effects. These laws detail the procedures for obtaining environmental authorisations, which include presenting and reviewing environmental impact studies.

Mexican Official Standards (NOMs) further establish mandatory technical regulations across various environmental domains, including air quality, water, soil, noise, and waste management.

Environmental Authorisation Process for Mining Projects

To obtain environmental authorisation for a mining project, the following steps must be completed:

Submission of an Environmental Impact Study

The project proponent must submit this study to the Ministry of Environment and Natural Resources (SEMARNAT). The study evaluates the potential environmental impacts of the proposed activities and includes proposed mitigation measures.

Public consultation

A public consultation process is conducted to allow citizen participation in evaluating the project.

Evaluation and resolution

SEMARNAT reviews the study and consultation feedback, issuing a resolution based on the procedures established in the law.

Monitoring and compliance

Once authorised, the project is subject to continuous monitoring to ensure compliance with the conditions outlined in the environmental authorisation.

Environmental authorisations are conducted at the federal level through SEMARNAT, making the process uniform across Mexico, and, on a case-by-case basis, state environmental authorities are involved.

Recent Legislative Reforms

Recent reforms have introduced significant changes to environmental laws, particularly affecting the mining sector.

Mining Law Reforms (8 May 2023)

These reforms imposed stricter environmental controls on mining projects, which resulted in a bill targeting open-pit mining, which has not yet been passed.

General Law on Climate Change Reforms (15 November 2023)

These amendments focus on addressing climate challenges, including greenhouse gas emissions, sustainability, energy efficiency, and natural resource management, such as water.

These reforms aim to address critical environmental challenges but have sparked numerous amparo lawsuits from companies and individuals in the mining sector. The lawsuits argue that the reforms infringe on acquired rights, the principles of legality, and the right to legal certainty, creating legal and operational uncertainty in the industry.

In Mexico, several areas are designated as protected and/or reserved zones to conserve biodiversity and ecosystems. These areas include nature reserves, national parks, biospheres, and other conservation categories, and the protection of these areas is regulated by Mexican environmental legislation. In protected areas, mining activity may be restricted or even prohibited, especially if it is considered that it could have significant negative impacts on the environment.

The environmental impact study requested for mining concessions must include an analysis that evaluates the potential environmental effects of the proposed activities and proposes mitigation measures, and in the case of a protected area, this must be noted and respected as a limit to mining operations. Mining companies operating near protected areas are often subject to stricter requirements regarding sustainable practices and corporate social responsibility.

Also, a recent legislative proposal that has not been approved has introduced significant restrictions on mining activities, particularly targeting open-pit mining. These measures are aimed at mitigating the environmental and social impacts associated with this extraction method, which has been criticised for its detrimental effects on ecosystems and surrounding communities. The bill effectively prohibit open-pit mining operations, emphasising the need to transition to more sustainable and less invasive extraction techniques.

Additionally, the new legal framework prioritises the protection and sustainable use of water resources in mining activities. These reforms represent a paradigm shift in Mexico’s approach to mining governance, prioritising ecological preservation and the protection of human rights.

In Mexico, the issue of community relations in mining projects is of great importance and is subject to specific regulations and an increasing focus on corporate social responsibility. The issue is even developed at the constitutional level and criteria have been defined by the Supreme Court of Justice.

Article 6° of the Mining Law contemplates the obligation to carry out a prior, free and informed consultation process with indigenous and Afro-Mexican people or communities in the area of the mining concessions. Some considerations of the consultation are:

• The consultation will be carried out under the direction of the Ministry.
• The consultation must adhere to the principles of being prior, free, informed, adequate, and conducted in good faith, and be simultaneous and supplementary to that required for obtaining the environmental impact statement, which must include information on the social impact study; however, said study will only be submitted after the mining concession bid has been awarded.
• The cost will be covered in advance by the applicant for the mining concession.

The recipient of a new concession in an area with existing indigenous or Afro-Mexican peoples or communities must sign an agreement to obtain the land use permit as well as to pay a consideration of at least 5% of the profits from the mining activity to the affected community, so the agreements signed with the communities for granting a new concession will have a fixed legal basis rather than being subject to discretionary criteria.

Additionally, the new legal framework priorities the protection and sustainable use of water resources in mining activities. Concessions and permits are now subject to stricter conditions to ensure that mining operations do not compromise water availability, quality, or equitable access for communities.

A prior and informed consultation is mandatory in Mexico. Article 6° of the Mining Law contemplates the obligation to carry out a prior, free and informed consultation process with indigenous and Afro-Mexican people or communities in the area of the mining concessions. Some considerations of the consultation are:

• The consultation will be carried out under the direction of the Ministry.
• The consultation must adhere to the principles of being prior, free, informed, adequate, and conducted in good faith, and be simultaneous and supplementary to that required for obtaining the environmental impact statement, which must include information on the social impact study; however, said study will only be submitted after the mining concession bid has been awarded.
• The cost will be covered in advance by the applicant for the mining concession.

The mining company should collaborate by providing detailed information about the project, participating in the identification of possible impacts and seeking agreements with the communities.

Additionally, the new legal framework priorities the protection and sustainable use of water resources in mining activities. Concessions and permits are now subject to stricter conditions to ensure that mining operations do not compromise water availability, quality, or equitable access for communities.

In Mexico, there are specially protected communities such as indigenous and Afro-Mexican people or communities.

Article 2, paragraph B, of the Mexican Constitution establishes the specific rights of indigenous peoples, including the right to self-determination, the right to consultation and participation, the right to maintain and develop their forms of social organisation, and the right to land and territory.

There is also a General Law for the Protection of the Cultural Heritage of Indigenous and Afro-Mexican Peoples and Communities, the purpose of which is to protect, safeguard, and develop cultural heritage and collective intellectual property.

Particularly, in mining matters, Article 6 of the Mining Law contemplates the obligation to carry out a prior, free, informed, culturally appropriate, and good-faith consultation prior to the granting of the mining concession title in the case of lots located in the territories of indigenous or Afro-Mexican peoples or communities.

The Mexican Constitution, international conventions and specific laws are mandatory in our country. As a result, mining companies must comply with these legal frameworks, particularly by respecting the rights of indigenous and Afro-Mexican peoples. This includes conducting citizen consultations before a mining concession is granted. The implementation of community consultations facilitates engagement and the establishment of agreements with communities affected by mining projects. Through these consultations, communities can voice their concerns and negotiate conditions they deem fair for the project’s development.

Particularly in Mexico, many mining companies enter into community development agreements as part of their corporate social responsibility activities and to gain the support of communities affected by mining projects. These agreements can address a variety of issues, including local employment, infrastructure, social services, educational and environmental programmes, among others.

According to Article 13 of the mining law, the recipient of a new concession in an area with existing indigenous or Afro-Mexican peoples or communities must sign an agreement to obtain the land use permit as well as to pay a consideration of at least 5% of the profits from the mining activity to the affected community, so the agreements signed with the communities for granting a new concession will have a fixed legal basis rather than being subject to discretionary criteria.

Mexico has a comprehensive legal framework that encompasses ESG regulations for the mining sector. These regulations seek to balance the development of the mining industry with the protection of the environment, the rights of communities and the promotion of ethical business practices. The effective implementation and enforcement of our legal system are fundamental to ensure the environmental and social sustainability of the mining industry in the country.

Also, the Mexican Constitution provides the fundamental principles for all legal regulations, particularly through the Mining Law, which governs mining activity in Mexico and must be in accordance with the general environmental and social obligations established in the General Law of Ecological Balance and Environmental Protection and the Federal Environmental Liability Law, as well as in the Law of Sustainable Rural Development.

In addition, there are several particular regulations whose mission is to protect the environment in the mineral industry, such as:

• NOM-023-STPS-2012, underground mines and open-pit mines – occupational health and safety conditions;
• NOM-032-STPS-2008, safety conditions for underground coal mines;
• NOM-120-SEMARNAT-2020, environmental protection in mining exploration;
• NOM-141-SEMARNAT-2003, specifications for tailings deposits;
• NOM-147-SEMARNAT/SSA1-2004, soil remediation concentrations;
• NOM-155-SEMARNAT-2007, environmental protection for gold and silver leaching;
• NOM-157-SEMARNAT-2009, mining waste management plans; and
• NOM-159-SEMARNAT-2011, environmental protection for copper leaching.

On the other hand, it is essential to mention that Mexico is part of the International Mining Convention. Its objectives are to consolidate socially responsible mining activity and reduce the environmental impact in the regions where mining is actively operating.

Mexico continues to evaluate the law regarding ESG. The country is also participating in broader ecological policies to mitigate its impact on climate change.

Illegal mining is a widespread issue that poses significant challenges globally, and Mexico is no exception. This illicit activity undermines the legal mining industry, disrupting operations and prompting co-ordinated responses from both the government and private sector. Illegal mining often occurs in rural or indigenous areas, creating tensions over the control and use of land and natural resources. These operations are frequently linked to labour exploitation and the forced displacement of local communities from their territories. Furthermore, in many regions, illegal mining has deep connections with organised crime, intensifying violence and insecurity in nearby communities and exacerbating social instability.

In response to these challenges, the Mexican government has implemented several measures:

• In May 2023, significant amendments were made to the Mining Law, National Waters Law, and related environmental legislation to tighten regulations in the mining industry. These reforms aim to enhance environmental protection and ensure sustainable resource management.
• A bill to ban open-pit mining and hydraulic fracturing (fracking) has been submitted, reflecting a commitment to mitigating environmental impacts and addressing community concerns.
• Security operations have been undertaken to combat illegal mining and its links to organised crime.

Industry actions:

• Formal mining companies are implementing social responsibility programmes to strengthen relations with communities and reduce the attractiveness of illegal mining.
• Companies are working alongside government agencies to report and combat illegal activities.

With the recent mining reforms, public consultations have made it possible to ensure legal certainty. Consultation must be free, carried out in good faith and in a manner appropriate to the circumstances. Its purpose is to obtain the consent of indigenous and Afro-Mexican peoples and communities, as well as to establish agreements between them and the mining companies.

As the reform is still recent, the implementation of citizen consultations under the Mining Law in Mexico is in its early stages, with only a limited number of cases currently in progress. By enshrining the right to consultation for indigenous and Afro-Mexican communities in the Mining Law, the aim is to guide the sector towards operations that align with best practices in respecting fundamental rights and promoting sustainable mining.

Mexico is committed to addressing climate change, and has recently implemented several reforms, particularly in the mining sector. Reforms were made to the Mining Law on 8 May 2023, and the General Law on Climate Change was also reformed on 15 November 2023. These initiatives seek to address environmental challenges related to greenhouse gas emissions, sustainability, energy efficiency, and the management of natural resources such as water.

A new requirement for obtaining a mining concession is securing authorisation from the Ministry of Environment and Natural Resources for the Programme of Restoration, Closure, and Post-Closure of Mines. Moreover, as part of these reforms, the relevant authorities may, if they deem it necessary, request to remove deposits or sites used for the final disposal of deposits, tailings dams, or dross that are located within protected natural areas, wetlands, bodies of water, watercourses, federal zones, or in locations where, due to the waste’s dispersal path in the event of a breach, they affect, or could potentially affect, population centres, productive zones, or ecosystems.

Holders of existing concessions for the use of national waters who undertake mineral exploration, exploitation, or processing activities must apply to the National Water Commission to change the designated use of these concessions from industrial to mining use.

In recent developments, the Mexican government has initiated a voluntary programme, inviting companies from various industries, including mining, to return unused portions of their water concessions to the federal authorities. The objective is to reallocate these surplus water volumes to regions facing water scarcity, thereby addressing critical water needs across the country.

Recently, several reforms have been implemented, particularly in the mining sector. Reforms were made to the Mining Law on 8 May 2023, and the General Law on Climate Change was also reformed on 15 November 2023. These initiatives seek to address environmental challenges related to greenhouse gas emissions, sustainability, energy efficiency, and the management of natural resources such as water.

A new requirement for obtaining a mining concession is securing authorisation from the Ministry of Environment and Natural Resources for the Programme of Restoration, Closure, and Post-Closure of Mines. Moreover, as part of these reforms, the relevant authorities may, if they deem it necessary, request to remove deposits or sites used for the final disposal of deposits, tailings dams, or dross that are located within protected natural areas, wetlands, bodies of water, watercourses, federal zones, or in locations where, due to the waste’s dispersal path in the event of a breach, they affect, or could potentially affect, population centres, productive zones, or ecosystems.

In Mexico, every six years the government issues its policies and strategies through the National Development Programme, which has among its objectives economic, social, and sustainable development, as well as specific actions for the mitigation of climate change and the promotion of renewable energies. Also, the Mexican government has a Special Climate Change Programme issued by the Mexican government, which includes objectives, strategies, actions, and goals to address the negative impact of climate change.

And in international matters, Mexico has ratified its commitment to the United Nations 2030 Agenda for Sustainable Development.

On the other hand, the main task of the Federal Environmental Protection Agency is to increase the levels of compliance with environmental regulations, to contribute to sustainable development and enforce environmental laws.

With the recent legal reforms in the mining sector, the exploration, extraction, processing, and use of lithium are now exclusively controlled by the Mexican state. These activities will be carried out by the decentralised public agency Lithium for Mexico.

Given the growing global demand for lithium, particularly for automotive batteries, Mexico stands to benefit from its lithium reserves, such as those located in Sonora. However, the country does not yet have any lithium mines in operation. Currently, there are three lithium deposits in the exploration stage, situated in the states of Sonora, San Luis Potosí, Zacatecas, and Baja California.

Copper is a crucial metal in Mexico, significantly impacting the mining industry and economy. Major production areas include Sonora, Zacatecas, San Luis Potosí, Chihuahua, and Durango. Mexico is a leading global copper producer, with output driven by large-scale industrial and small-scale artisanal operations. Copper is a key export, primarily sent to the USA and China.

The Ministry of Finance and Public Credit is responsible for collecting taxes, improvement contributions, duties, products, federal benefits, and associated charges, and for administering the Income Tax Law.

With respect to exploration and exploitation, holders of mining concessions must pay fees for the extraction of minerals according to the hectares exploited, the value of the minerals extracted, and the rates established by the executive. Additionally, mining companies must declare and pay taxes on the profits obtained from mining exploration and exploitation.

In addition, Mexico has the Mining Special Tax and Extraordinary Mining Duty:

• The Mining Special Tax is a 7.5% tax levied on income from the sale of minerals, ensuring mining companies contribute to public revenues.
• The Extraordinary Mining Duty is a 0.5% tax on the annual income from gold, silver, and platinum sales, designed to capture additional value from precious metals.

In 2024, the government proposed raising royalties from 7.5% to 8.5% and from 0.5% to 1.0%, sparking industry concerns about deterring investment.

These measures aim to balance government revenue with sustainable investment in the mining sector.

Mexico has double taxation treaties with several countries, which may affect the taxation of foreign investors. These treaties seek to avoid double taxation and usually include specific provisions for the mining sector.

With respect to mining tax incentives, exploration and development expenditures in mining projects may be tax deductible in some particular cases, helping to reduce the tax burden for mining companies.

Mexico has signed double taxation treaties with several countries, which can help investors avoid paying taxes on the same income in two different jurisdictions.

In Mexico, the transfer or sale of a mining project is subject to taxation, specifically income tax. The tax is mainly levied on gains on the disposal of assets – ie, when a mining project is sold or transferred, any resulting capital gain is subject to income tax. Certain deductions and adjustments may be allowed in the calculation of capital gains that may influence the tax base.

Foreign investors may be subject to specific tax rules, and the existence of treaties to avoid double taxation between Mexico and the investor’s home country may be relevant. These treaties may provide certain protections and impact the taxation of capital gains.

The presence of high-quality deposits improves project profitability and represents an excellent investment opportunity. Mexico ranks in the top 10 worldwide for 16 different minerals. Notably, it is the world’s leading producer of silver, second in fluorite production, and third in sodium sulphate.

One of the key advantages of mining in Mexico is the enhanced efficiency of productivity and costs. This is largely due to lower prices for supplies and labour compared to many other countries.

Furthermore, Mexico has developed a robust supporting sector comprising suppliers with a significant capacity to efficiently provide the diverse goods and services required for mining operations.

In 2023, the estimated investment in the Mexican mining sector reached USD5.211 billion.

According to the Mexican Social Security Institute, as of December 2022, the mining and metallurgical sector employed 417,380 workers.

In Mexico, mining concessions may be granted only to Mexican nationals, Mexican companies, ejidos (land granted by the government to individuals for agricultural and ranching purposes), agrarian communities, townships and indigenous or Afro-Mexican peoples or communities. In the case of companies, they must be domiciled in Mexico, and their by-laws shall cover the exploration or exploitation of minerals and substances subject to the Mining Law. Foreign participation in the ownership of such companies must comply with the Foreign Investment Law provisions, which currently do not impose any limitations on mining.

Mexico is committed to the development of the mining sector both nationally and internationally, recognising the impact of its participation in key multilateral and bilateral treaties in this field. These include:

• The North American Free Trade Agreement: this was superseded by the United States-Mexico-Canada Agreement (USMCA, known as T-MEC in Mexico) in 2020.
• The United Nations Framework Convention on Climate Change: Mexico is a signatory to this agreement, which addresses climate change issues – mining activities are therefore subject to regulations arising from international efforts to mitigate greenhouse gas emissions.

Mexico also maintains international co-operation agreements on mining matters with the following countries: Canada, Italy, Guatemala, South Korea, Chile, Australia, China, and Cuba.

The mining sector can face significant challenges in attracting investment for project development. The industry’s constant need for capital, coupled with the high risks involved for investors at various stages, presents a hurdle. Factors such as commodity price volatility, rising production costs, and investor risk aversion have driven mining companies to seek alternative financing options.

Previously, the principal sources of investment used to be through traditional mechanisms for raising equity and/or debt, either by placing capital with the investing public (for example, through the Toronto Stock Exchange), financial institutions, programme funds from the government sector or private companies with some important role in the world of mining. However, during the exploration and exploitation stages, mining projects require a lot of money and have high investment return risks. Therefore, mining royalties and streaming agreements arose as an alternative financing mechanism for mining projects and operations through royalties and streaming companies focused on the industry.

The source of financing for a mining project can include a variety of options, and companies often turn to different sources depending on their specific needs and the stage of the project.

The main financing mechanisms include:

• the purchase of shares in mining companies;
• the listing on the national or international stock exchange;
• loans from financial institutions;
• royalty and metal streaming agreements; and
• government programmes.

The Canadian market has had a significant presence in the Mexican mining industry. While there are also mining projects owned by Mexican capital, these projects often require further resources to progress their development.

In Mexico, domestic and international stock markets play a crucial role in the mining sector, as they offer mining companies the possibility of raising capital to finance projects and operations through the issuance of financial securities. In addition, the markets impact the valuation of mining companies, investor perception, and the ability of companies to carry out exploration and development projects.

Thanks to the stock market, both in Mexico and abroad, mining companies can access local investors and domestic capital through various financial instruments, diversifying their sources of financing and reducing dependence on bank loans or other forms of funding.

Listing on the stock exchange allows mining companies to be valued by the market based on the supply and demand for their shares. Market capitalisation reflects the market’s perception of the company’s value.

Because stock market listings necessitate financial transparency, mining projects developed in Mexico, along with their progress, become visible to the public. This increased visibility can either encourage or discourage investment.

Security Interests Over Mining Concessions

Holders of mining concessions in Mexico may grant security interests or liens over their concession rights to secure obligations with third parties, provided the concessions are part of an operating mine. The beneficiary of such a security must notify the Mining Authority and acknowledge that within a six-month period following the enforcement of the guarantee or lien, they must either comply with the legal requirements to become a concession holder or transfer their rights over the concession.

Common Legal Instruments for Securing Mining Concessions

• mortgage over mining concessions;
• non-possessory pledge; and
• security trust, which can be established with a financial or authorised institution that provides trust services.

All security interests over mining concessions must be registered with the Public Registry of Mines to be enforceable against third parties.

Security Interests Over Related Assets

For related assets such as real estate, inventory, personal or movable property, the applicable legal framework depends on the asset’s nature:

• Real estate is secured through mortgages and registered in the Public Property Registry.
• Inventory and movable property are secured through non-possessory pledges and registered in the Security Interests Registry for Movable Property.
• Shares or corporate rights are secured through share pledges.

Mexico’s robust registration system ensures the validity and enforceability of security interests, with appropriate registries depending on the type of asset involved, such as the Public Registry of Commerce or other specialised registries.

The Future of the Mining Industry in Mexico

The mining industry in Mexico is expected to continue evolving toward more sustainable and socially responsible practices. Governmental agencies are increasingly focusing on energy efficiency, water management, and the mitigation of environmental impacts.

The growing demand for key minerals essential to the energy transition, such as lithium, cobalt, and nickel, presents a significant opportunity for the Mexican mining industry. Simultaneously, the global push to reduce greenhouse gas emissions has led many companies and governments to commit to net-zero carbon goals, and Mexico is anticipated to follow this trend.

Recent Legal Reforms and Challenges

In line with global sustainability efforts, Mexico has undertaken significant legal reforms shaped by contributions from civil society organisations focused on environmental issues. Key reforms include:

• Mining Law Amendments (8 May 2023); and
• General Law on Climate Change Reforms (15 November 2023).

These reforms aim to address pressing environmental challenges, including greenhouse gas emissions, sustainability, energy efficiency, and the management of critical natural resources such as water. Specific provisions target waste management, land restoration, and water resource protection in the mining sector.

However, these legislative changes have sparked significant controversy. A large number of amparo lawsuits have been filed by companies and individuals in the mining sector, arguing that the reforms infringe upon acquired rights, principles of legality, and the right to legal certainty. This has created economic and labour risks, destabilising the industry.

To address these legal challenges, the Supreme Court of Justice of the Nation (SCJN) issued General Agreement No 3/2024, instructing courts to delay rulings on amparo lawsuits and appeals related to the 2023 reforms. The SCJN will ultimately determine the constitutionality of these reforms, a decision that remains pending.

The resolution of the Supreme Court on the validity of the New Mining Law or the restatement of the former is a key aspect to consider for the future of the mining industry in Mexico and, in case the New Mining Law is confirmed, the strict application or softening by the Mexican government of the same will play a decisive role in shaping the regulatory environment and future prospects of Mexico’s mining sector.