Investment in the mining industry in Mexico
By Rodolfo Sánchez-Arellano, New Corporate Approach, S.C.
According to information from the Mexican Geological Survey, Mexico has 23 sites classified as giant (world class) and six labelled super giants. Backed by the strong price of metals, mining investment in Mexico offers an excellent opportunity.
Mexico's Constitution provides that the lands and waters within the national territory belong to the Mexican State. The use and exploitation of such national resources by private parties are only permitted pursuant to concessions granted by the Federal Government. Mining concessions over ore deposits may be granted only to Mexican nationals, Mexican companies, ejidos (land granted by the government to individuals for agricultural and ranching purposes), agrarian communities, townships and indigenous communities. Foreign participation in the ownership of such companies must comply with provisions of the Foreign Investment Law, which currently does not impose any limitations with respect to mining, except for radioactive materials.
Concessions are granted over "free land" pursuant to the "first in time, first right" principle, provided all other requirements under the Mining Law and its regulations are met. "Free land" means any land within the national territory, except for (i) zones incorporated into mineral reserves; (ii) land covered by existing concessions and allotments; (iii) land covered by pending applications for mining concessions and allotments; (iv) land covered by mining concessions granted through a bidding process and those derived there from which have been cancelled; and (v) land covered by mining lots from which no concessions would be granted due to the cancellation of the bidding process.
The mining rights covered under a concession do not include direct ownership or possession rights over the surface where the ore deposits are located.
Rodolfo Sánchez Arellano, Tax Partner
New Corporate Approach, S.C.
Mexico City, Mexico
T: +52 55 8421 9359
Rodolfo Sánchez Arellano has more than 20 years of experience advising clients in corporate taxation, international taxation, cross border transactions and real estate and infrastructure matters.