1st update: Initiative to amend the mining law

This client alert follows the one dated April 20, 2023,¹ in which we described the main points of the initiative to amend the law and regulations in the mining sector presented by the President on March 28, 2023 (the "Presidential Initiative").

In this regard, last Tuesday, April 18, 2023, a new initiative to amend the law on mining concessions was made public. Now presented by the Morena Parliamentary Group in the Chamber of Representatives, it is titled "Initiative with project of decree by means of which various provisions of the Mining Law, the National Water Law, the General Law of Ecological Balance and Environmental Protection and the General Law for Prevention and Integral Waste Management, regarding mining and water concessions are amended, added and repealed" (the "New Initiative").²  The New Initiative replaced the Presidential Initiative. The New Initiative was discussed and approved in the Chamber of Representatives on Thursday, April 20, 2023 and turned to the Senate for discussion and eventual approval.

Main differences between the New Initiative and the Presidential Initiative

Although the New Initiative is substantially similar to the Presidential Initiative, there are some relevant differences, among which the following stand out:

• The New Initiative proposes that the term of mining concessions will be 30 years, of which the first five years will be destined to pre-operational activities. These concessions may be extended for an additional period of 25 years. At the end of this period, the holder of a mining concession could participate in the bidding process for the same lot (lote minero), as the case may be. The Presidential Initiative established a 15-year term for mining concessions.
• The New Initiative proposes, in the event that during the extraction activities on certain lot substances not originally included in the corresponding mining concession are detected, the mining concession of the relevant lot may be modified to include such substances upon payment of the corresponding discovery bonus. This proposal was not included in the Presidential Initiative.
• The New Initiative proposes an amount of 5% of the difference between the fiscal result of the holder of a mining concession (as referred to in the Income Tax Law) minus the amounts covered for non-deductible contributions for purposes of such tax, as consideration to be paid to the indigenous communities in the case of mining lots located in areas inhabited or occupied by such communities. The Presidential Initiative proposed an amount of 10% for the same case.
• The New Initiative proposes that holders of mining concessions will be able to use raw water (agua de laboreo), prior notice given to the National Water Commission and payment of the rights for the use of such water. The Presidential Initiative did not foresee this possibility.
• The New Initiative proposes the constitution of easements or temporary occupation of the land necessary to carry out the mining extraction works in favor of the holders of mining concessions. The Presidential Initiative did not foresee this possibility.
• The New Initiative proposes that concessions may be used as collateral for the obligations of the holder of a mining concession, which was not foreseen in the Presidential Initiative.
• The New Initiative proposes that the holder of a mining concession must implement water reuse measures within the corresponding mining lot, in order to achieve at least 60 percent recycling of treated wastewater in its facilities, which was not foreseen in the Presidential Initiative.
• The New Initiative changes the name of the "concession for mining use" to "concession of national waters for industrial use in mining" and increases the proposed term of such concession from five to 30 years, with respect to the provisions of the Presidential Initiative.
• The New Initiative does not foresee the restriction foreseen in the Presidential Initiative that the National Water Commission should deny the concession for mining use in the event that the interested party intends to concentrate more than 30 percent of the total volume of availability of the watershed or aquifer in question.

The most relevant specific provisions for current holders of mining concessions provided for in the Presidential Initiative are maintained in the New Initiative. For example, mining concessions for exploration and extraction granted prior to the effective date of the New Initiative (if approved) will have the duration foreseen in the respective concession title. In addition, the holders of mining concessions would have a term of 365 days to: 1) submit a letter of credit to guarantee the potential damages that may be caused during the performance of mining activities; 2) submit the restoration, closing and post-closing program for the mine and 3) remove from the deposits or final deposition sites, the mine tailings dams (presas de jales) or residues located within natural protected areas, wetlands, riverbeds, federal areas, protected areas or other places that may affect ecosystems or communities.

_{1 Available at: https://www.whitecase.com/insight-alert/initiative-amend-mining-law-and-regulations
2 Available at: http://gaceta.diputados.gob.mx/PDF/65/2023/abr/20230418-III-2.pdf} 

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_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

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