By Raul Cortes
MEXICO CITY (Reuters) – Newmont’s Mexican division said on Wednesday it sees an “openness for dialogue” from the Mexican government, amid the proposed increase in mining royalties, which could potentially hinder billions of dollars in investments.
WHY IT’S IMPORTANT
The proposed increase in mining royalties could block more than $6.9 billion in investments over the next two years, according to the country’s mining chamber, adding to the challenges impacting the sector such as previous administrative decisions and potential legal reforms.
Newmont, a global leader in gold mining, operates the huge Penasquito open-pit gold mine in Mexico which produces gold, silver, zinc and lead, and processes an average of 110,000 metric tonnes of fresh ore daily.
KEY QUOTES
“There is a lot of interest from the companies, a lot of commitment to continue investing in Mexico,” Ana Lopez, manager of Newmont’s unit in Mexico said, although she noted that “the best conditions in terms of certainty, opportunity and collaboration are also necessary for us to continue to do so.”
“This and any norm that is approved and applies to us, what we have to do is comply with it,” she said, referring to the controversial royalty increase proposal.
Lopez also welcomed the stance taken by Mexican President Claudia Sheinbaum last week, proposing a review of a legal reform which sought to ban open-pit mining, an issue that has also generated concern in the industry.
CONTEXT
The Mexican government’s proposal aims at increasing royalties from the industry, arguing that metals prices have grown steadily in recent years.
The mining sector was already impacted under previous President Andres Manuel Lopez Obrador, who refused to grant new mining concessions, and it faces new challenges with the administration of his successor, Sheinbaum, as legal reforms could hinder mining operations in Latin America’s second largest economy, after Brazil.