MICLA

McGill Research Group Investigating
Canadian Mining in Latin America

Mexico

Key Data

Population:114,975,406 people Area:1,964,375 km2 Density:58 people / km2 Demographics:mestizo 60%
Amerindian 30%
white 9%
other 1%
Mineral Resources:silver, copper, gold, zinc GDP:$1,657.0 billion GDP per capita:$14,411 GINI:51.7

History

Mining has long been been an important aspect of Mexico’s history. The Aztecs had mined for various precious metals, semi-precious stones and obsidian for weapons and ritual objects. Spanish colonization of what would become the Viceroyalty of New Spain was famously motivated by the quest for precious metals. Although these were first obtained as part of the spoils of conquest, plunder quickly gave way to mining silver and gold deposits. Only months after the final battles for Tenochtitlán (August, 1521), Hernán Cortés was dispatching mining experts to investigate gold fields at  the Rio Balsas and the Rio Papaloapán in Oaxaca, as well as the reported metal deposits of Súltepec – Taxco.[1]

These areas became New Spain’s first colonial mining districts, and were soon followed by the opening of Pachuca-Real del Monte, Zacatecas, Guanajuato and Sombrete in the 1540s-1550s, then San Luis Potosí, Durango, and Parral (1590s to 1630s), and finally to Sonora – the northern edge of New Spain – by 1633. Over three centuries of Spanish colonial rule, Mexico became one of the world’s leading producers of silver, issuing an estimated 49 000 metric tons of the metal. [2]

The struggle for Independence (1810 to 1821) hit Mexican mining hard: operations were halted by civil conflicts , capital investments were blocked, and mines were left to flood.  Intensive mining picked up in the 1870s as the Liberal regime of Porfirio Diaz opened the sector to foreign direct investments with preferential legal reforms. British and American companies brought industrial techniques and capital in order to rework colonial-era deposits. Industrialization allowed the scaling up of production necessary to compensate for the lower ores grades.  The financial scale of these new mines put them out of reach of most Mexican competitors. The Mexican mining sector became an American preserve and the source of some leading fortunes of early twentieth century capitalism (most notably the Guggenheims).

The Mexican Revolution (1911-1920) reasserted national control over Mexico’s natural resources beginning with the nationalization of the oil industry and the creation of PEMEX. The Mexican state encouraged the formation of worker’s cooperatives which took over the operations of a growing number of mines. In 1961 the Constitution was reformed and the Commission on the Exploration and Treatment of Mineral Resources was created which nationalized Mexico’s mineral resources and prohibited foreign mining firms from owning more than 50% of a mining project.

The eighties in Mexico were marked by the twin shocks of the 1982 debt crisis and the 1986 drop in oil revenues. The negotiation and signing of NAFTA (1994), was accompanied by a related set of sectoral reforms that aimed at reopening the Mexican economy to foreign direct investment and external technological modernization. A year before NAFTA, a new mining code was put in place, the Ley Minera of 1993. This was part of a broader trend at the time which saw the the systematic liberalization of mining codes around the world.

The Ley Minera of 1993 introduced a number of key innovations that were tailored to large-scale open-pit mines. Rights to sub-surface resources were granted pre-eminence over existing land rights such as ejido tenure, agrarian use, and so on. Given the impacts open-pits have on the surface, this was a necessary amendment for large-scale mining to take root. The new code guaranteed that title and concession could not be legally revoked before term and it lengthened the duration of title. .

Encouraged by the rising price of precious metals, foreign mining corporations returned to Mexico. This time, however, the principal players have been corporations based in Canada. Within four years beginning in 1991 the number of properties owned by Canadian companies in Mexico almost quintupled (52 to 244). In 2005 Canadian corporations controlled close to two-thirds of the Mexican mining industry, developing some 420 projects around the Republic. 2010 figures show that close to eighty percent (78.5%) of the 718 mining projects currently under development are under their control.(Servicio Geológico Mexicano, Anuario Estadístico de la Mineria Mexicana, 2010).

Mining Characteristics

The geography of Mexico mainly consists of a large plateau bordered by two mountain ranges: Sierra Madre Occidental and the Oriental. A lot of volcanic activity occurs around the Sierra Madre range, which results in an abundance of mineral resources in the area (infomine.com/…). There is a major silver belt that runs throughout the Sierra Madre Occidental range called La Faja de Plata (silverinvestingnews.com/…). The abundance of natural resources has attracted many foreign mining firms to the country. In 2009 – 2010, 75% of Mexico’s mining sector was comprised of Canadian mining companies and they developed over 700 mining projects (Anuario Estadistico de la Mineria Mexicana 2010) 700 foreign mining companies in Mexico, 210 of which were Canadian run (infomine.com/…). Of these, 475 mining sites extracted precious metals such as gold and silver (infomine.com/…). The other major resources that are extracted in Mexico are copper, iron, and zinc. The major mining states are Zacatecas, Sonora, Chihuahua, Coahuila and Durango (firstmajestic.com/…).

Economic Context

Mexico’s economy has been steadily growing in the past three years after a significant drop in the GDP growth rate in 2009 (cia.gov/…). The economy is about a third of the size of the United States, amounting to about $ 1.657 trillion in 2011 (cia.gov/…). Mexico is a free market economy and signed the NAFTA agreement in 1994. Natural resource extraction is a small part of Mexican economy; in 1999 mining accounted for 1.2 % of Mexico’s GDP (nationsencyclopedia.com/…). Non-fuel mining accounted for almost all of this percentage, and accounted for .3% of exports in 1999  (nationsencyclopedia.com/…).

Historically, natural resources have been an extremely important part of Mexico’s economy. Mexico is still an important country for silver production; it is the top silver producer and one of the primary copper producing countries (nationsencyclopedia.com/…).

The mining sector employed about 300,000 Mexican people in 2007 (gbreports.com/…). In 2011 the unemployment rate in Mexico was 5.1%, which is not necessarily an accurate reflection of the employment rate because it does not account for underemployment (cia.gov/…). First Majestic Silver Corp. a Canadian mining company, reported that the mining industry is expected to have invested US$21.75 billion in Mexico’s economy by the end of 2012 (firstmajestic.com/…).

Political Context

Mexico has had a fairly stable democracy since the end of the Mexican Revolution in 1921. Democracy has been so long-standing because presidents are limited to one six-year term in office. They are allowed to run for president indefinitely, but never for two consecutive terms. There are multiple political parties, but the most prominent are the PAN (National Action Party), PRI (Institutional Revolutionary Party), and PRD (Party of the Democratic Revolution). A form of the PRI party had been in power since the beginning of Mexican democracy until 2006 when Felipe de Jesus Calderon Hinojosa, a member of the PAN party, was elected as president. The next presidential elections are scheduled to be held on July 2, 2012.

Although democracy is stable in Mexico, the country has a strong history of corruption and violence. There is corruption on every level in Mexico, ranging from the government to every day bribery and patronage. Mexico has been conducting a war against drug trafficking and drug cartels, but corrupt military and government officials have impeded the government’s work against narcotics. Many corrupt leaders work simultaneously with the government and with the drug cartels. Corruption also occurs on a basic level throughout Mexico. Transparency Mexico did a study in 2007 and discovered that Mexicans paid about $2.6 billion in bribes, which amounts to about $24 per person on average (latimes.com/news/…).

Since Mexican independence, government’s attitudes toward mining practices in Mexico have fluctuated greatly. Early presidents like Benito Juárez and Porfirio Díaz supported mining and tried to attract foreign investment and companies (firstmajestic.com/…). They changed tariff codes and laws to create more flexible and open conditions for foreign mining companies (firstmajestic.com/…).

However, the government’s attitude toward mining became more liberal in 1884 when Díaz changed the mining code to give landowners the right to subsoil assets (arizonagoldprospectors.com/…). The Constitution in 1917 reinforced this ownership (firstmajestic.com/…). In 1961 the Constitution was reformed and the Constitution on the Exploration and Treatment of Mineral Resources was created which basically nationalized Mexican natural resources and prohibited foreign mining firms from owning over 50% of mining projects; this forced many foreign firms to sell shares of their businesses (firstmajestic.com/…).

The government’s stand on mining changed once again to become more neo-liberal in 1990 when it changed the Constitution to allow foreign firms to own 100% of mining projects as long as they are incorporated as Mexican companies (bakermckenzie.com/…). This opened up Mexico to more extensive mining practices. The government has continued to create polities and laws to create a more welcoming environment for foreign mining firms. The Mexican government created a Mining Law in 1992; it is a national law that regulates mining concessions and imposes restrictions on mining companies (bakermckenzie.com/…). Article 6 of Mining Law states that mining has priority over any other land use including agriculture and housing (miningwatch.ca/…). In 2005 the government changed the Mining Law to further deregulate the mining sector (doingbusinessinmexico.com/…).

Currently the government supports mining throughout Mexico, as long as they are associated with national mining firms. The government has supported laws and policies that primarily benefit mining companies.

Social Context

There is a large population of indigenous people in Mexico, about 30% of the population identifies itself as such. These indigenous groups, despite their prominence in the country, are often marginalized within Mexican society. Indigenous movements to protest the unfair treatment toward them surged in 1975 (academicjournals.org/…). One reason for this surge in indigenous social movements has been the influx of mines. The location of mines in Mexico often corresponds with rural indigenous territory, and indigenous groups have consequently had to respond to the development of transnational mining projects.  The responses of indigenous communities are not homogenous and they differ throughout the country, depending on the situation, extent of the social issue, and identity of the indigenous peoples. In general, however, it is hard for indigenous groups to mobilize because they usually don’t know the extent of the damage that the mine does until after the mining project has begun and it is hard to stop it (sipaz.org/…).

Under the Agrarian Law in Mexico, ejido members have the right to decide on land use as a group. One of the major issues that “ejidarios” have with the arrival of mines, however, is that they feel as though they were not properly consulted by the government, mining firm, or ejido leaders before exploration begins. An international organization that can help this issue is the 169th Convention Concerning Indigenous and Tribal Peoples, which was established by the International Labor Organization and ratified in Mexico in 1990. This convention stated that ejidarios have the right to be involved in consultation of land use and should participate in all decisions that affect them in that regard (sipaz.org/…).

On a national level, there are various organizations that protect indigenous and campesino rights in the face of . The most important is REMA (Red Mexicana de Afectados por la Minería, or Mexican Network of Those Affected by Mining), which is a Mexican national organization whose goals are to educate Mexican people about the risks associated with large-scale mining (sipaz.org/…).

On a smaller scale, many indigenous communities mobilize on their own and hold protests, marches, and blockades to try to impede mining activities in their communities.

Bibliography

[1] Hernán Cortés, “De los muchos descubrimientos de minas y las expediciones que envio Hernan Cortes” in Javier Moctezuma Barragan y Sergio Pelaez Parell, eds., Antologia minera de Mexico. Primera estación, siglo XVI (Mexico DF: Sec. de Energia, Minas e Indutria Paraestatal, 1994), 35-37.

[2]  Alvaro Sánchez-Crispín, “The Territorial Organization of Metallic Mining in New Spain,” 157-58; Peter Gerhard, A Guide to the Historical Geography of New Spain, passim; Robert C. West, Sonora: Its Geographical Personality. (Austin TX: University of Texas Press, 1993), 45; Richard L. Garner, “Long-term Silver Mining Trends in Spanish America: A Comparative View of Mexico and Peru,” American Historical Review (3:4 (October, 1988).


Timeline of Key Events

2016
2015