Mining Law: Inadequate Changes

In its plenary session on Thursday 25^th April, the Chamber of Representatives approved numerous fiscal changes which in theory will mean creating new and higher economic contributions from national and foreign mining companies. According to the propositions of the approved legislation, this will result in greater contributions from these companies to the Mexican government as well as to the states and municipalities where mining resources are exploited through the concessions that cover more than 26 percent of the country.

With 359 votes in favour, 77 against and 19 abstentions, representatives approved the initiative presented by two PRI (Institutional Revolutionary Party) representatives on 12 March, in which they proposed changes to the Mining and Tax Coordination Law that authorises the federal government to charge a special mining duty of 5 percent on mining companies’ net profits. The 77 votes against were from representatives from the National Action Party, which has always made a point of going against the fundamental needs of the country’s working classes, and although they argued issues of procedure, it is evident that they positioned themselves in extreme defence of the exorbitant profits of mining companies.

In line with this approved project of changes, the 5 percent of the mining companies’ net profits will be divided with 30 percent for the federal government, and the remaining 70 percent of this amount will go to states and municipalities where minerals are exploited and extracted. There is mining activity in 24 Mexican states, with the highest volume of extraction in Sonora, Zacatecas, Chihuahua, Coahuila, San Luis Potosí and Durango.

This approval will have to pass through the Senate for modification or ratification. By the time the deadline imposed by Legislative Authority passed last Tuesday 30 April, the legislative proceedings that would lead to full expedition of the changes had not been completed.

Whatever way we look at it, this is a minor step forward as regards the chaotic situation that thanks to Carlos Salinas de Gortari’s government prevailed in the privatisation of the mining and metalwork sector, and which has brought benefits only to companies and not to the State, mine workers or communities where extraction or industrial activity take place. The high profits that these companies obtain from exploiting the country’s minerals reached 2.148 billion dollars, according to data from the Ministry of Economy, which indicates the scale of national and foreign investments in Mexican mining.

The figures of this disproportionate situation are well-known. Mining companies pay no duties on the production of minerals, including gold, and they are charged only for the area of the land they exploit, which has been considered by various analysts as a despicable plundering of the nation. In general, companies pay between 5 and 11 Pesos for each hectare of land in their concessions, ridiculous prices when you think that over a quarter of the area of Mexico is given in concessions by the State, in other words, 50 million hectares, and this gives to terribly low results returns compared with what mining companies pay for the land they use in other countries.

If this initiative is approved by the Senate, they will now have to make contributions based on the generous income gained from production, or privileges, which despite their limitations, now represent a step forward compared to the previous situation. Since Salinas de Gortari’s presidency, Mexico has paid tiny quantities compared to other countries: up to 10 percent in Australia, up to 5 percent in Chile, up to 8 percent in Russia, up to 12 percent in the United States and up to 17.5 percent in Canada.

There must be greater steps forward in the future so as to bring mining companies into line with the country’s real interests. It is impossible for Mexico to go on subsidising mining companies in such an abusive way as has been seen up to now, with the companies gaining all the benefit of income from minerals extracted, pillaging the environment, leaving towns without water, stripping people of any chance of development in their communities and maintaining scandalous levels of poverty and want. And still they act with insensitivity and arrogance towards labour and human rights.

These modifications to the current Mining Law, however, do not include due respect for the integrity, security and health of the sector’s workers. If we want to bring about a profound change in the mining sector, these modifications must not exclude, among other things, the criminalisation of negligence on the part of businesspeople, whose lack of sensitivity and disrespect for workers bring about tragedies such as that at Pasta de Conchos in 2006, and many others previous to and following that event.

Since that time I have been calling for a law to be passed that would mean legal sanctions, even prison sentences, for businesspeople who commit industrial homicide like the one mentioned. It is essential that, as Senator Dolores Padierna said in what was a welcome call for this kind of legislation, there be exemplary punishments for the directors of companies who commit this crime of commission or omission, as it is also referred to. They must not be allowed to go on playing irresponsibly and inhumanly with the safety and lives of our workers.