A proposed increase in mining royalties could block more than $6.9 billion in investments over the next two years, the Mexican Mining Chamber (Camimex) warned on Thursday.
As part of its national budget proposal, the Ministry of Finance proposed last week modifying the Federal Law of Rights to increase the royalties that the State receives from the industry, arguing that metal prices have grown steadily in recent years.
“This measure (…) would have an impact on a sector that has already seen its contributions and investments reduced due to the paralysis caused by the lack of new concessions, overregulation and threats of a change in the legal regime,” said the Chamber. Mining of Mexico (Camimex).
Read: The project to prohibit open pit mining advances in Committees of Deputies
“This increase, combined with the lack of permits and restrictions on exploration in recent years, could inhibit more than 6.9 billion dollars that the mining sector could invest in new projects in the next two years,” Camimex added in a statement. release.
The union explained that with a total tax burden of 52.68%, Mexico is already at a disadvantage compared to other mining countries in the region such as Chile, Peru and Canada.
The Government plans to increase the so-called “special mining right” to 8.5% from the current 7.5% and increase the so-called “extraordinary right” to 1.0% from the current 0.5%.
“The mining sector is a robust sector that obtains important economic benefits from the exploitation of minerals and substances owned by the Nation,” the Treasury stated in its budget project.
Last year, Congress changed the rules of the sector to shorten the duration of concessions to 30 years from 50 and tighten water extraction permits. Another reform aimed at prohibiting open pit mining remains in the hands of legislators.
Mexico is the main producer of silver in the world and one of the largest producers of copper and gold. The mining sector, which contributes around 2.5% of the national Gross Domestic Product (GDP), is the destination of million-dollar investments from the United States and Canada.
The Mining Chamber estimated in July that investments in the sector in Mexico would total 5,131 million dollars this year, 3.4% more than in 2022, although well below the record of 8,043 million dollars registered in 2012.
The group brings together the largest companies in the sector that operate in the country such as Grupo México, Minera Autlán, Industrias Peñoles and Peñasquito, from Newmont.
With information from Reuters
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