Mexico’s Supreme Court could strike down president’s mining reforms next week

Once a popular destination for Canadian explorers, Mexico’s recent mining reforms are driving away investment — even as a looming Supreme Court decision is likely to toss out the new law, deemed by industry sources as unworkable.

The reforms introduced last May by President Andrés Manuel Lopez Obrador (known by his initials as AMLO), require pre-consultation with communities before exploration, impact studies and cash bonds in case of damage that junior explorers may find difficult to raise. Authorities can cancel exploration concessions after two years if no work is completed and critics say water allowances have become harder to get. AMLO has also nationalized the country’s still-developing lithium sector and proposed a ban on open pit mining.

"If you plot a graph of the discoveries and production of gold and silver in Mexico, it starts a very rapid upward climb year on year from 1992, when they opened up exploration to foreign companies. And now, what you're seeing is a cliff,” the chief executive of a mid-tier silver mining company operating in the country told The Northern Miner. “And we're going over the cliff because no one's doing exploration. You don't have future mines if you don't do exploration.”

Canadian companies accounted for up to US$8 billion in exploration spending and 70% of foreign investment in Mexico’s mining sector between 2012 and 2022, according to figures from the country’s mining chamber, Camimex. They’re eyeing next week’s Supreme Court ruling like a traffic light for project exploration and development.

They’ve already been hard hit by AMLO’s mining reforms, Exploration Insights mining analyst Joe Mazumdarsaid.