Mexican governors reject cuts to mining fund

The governors of five mineral-rich Mexican states sent a letter to the country’s president Andrés Manuel López Obrador asking him to give them back a recently-cut mining fund.

The fund is contemplated in the Law of Federal Right and was introduced in 2015. Its resources, which added up to some $236 million in the last fiscal year, came from taxes paid by mining companies operating in the country and were distributed among the municipalities where the activities of such companies take place. The money was to be used to mitigate environmental impacts, as well as to promote infrastructure and social development. 

However, the Mexican senate -where the ruling, left-wing party Morena holds a majority- introduced a series of reforms to the law and ruled this week that 85% of the funds previously destined to the mining fund will be reallocated to the Public Education Secretariat. The senators that pushed for the changes argued that the fund wasn’t transparently managed by the municipalities receiving it.

But for the governors of Chihuahua, Durango, Guerrero, Zacatecas and Sonora, being stripped from the fund will hinder their states’ ability to finish ongoing projects that aimed at improving clean water, drainage and sewage facilities, as well as municipal and rural roads in communities surrounding mining operations.

“We demand the restoration of the original mechanisms through which states and municipalities had access to the fund,” the five governors wrote in their letter to López Obrador. “Our laws must promote mining activities and, at the same time, guarantee that the monies that such activities generate are fairly and proportionally distributed among the states that host mineral resources in their subsoil.”

Even though he didn’t sign the letter, the governor of the western state of Jalisco, Enrique Alfaro, told local media that the changes to the mining fund will severely impact the budgets of at least 17 municipalities in his state.

Similarly, the Mexican Mining Chamber, the Mining Group within the Canadian Chamber of Commerce, the Mexican Association of Mining, Metallurgical and Geology Engineers, the WIM Association of Women in Mining, and the Mexican College of Mining, Metallurgical and Geology Engineers, issued a communiqué asking authorities to reverse their decision and destine the resources in the fund “exclusively to communities, municipalities and states where mining activities take place.”

Mining is key to the economy of at least 21 states of the 32 that comprise Mexico. The Latin American country is the world’s top silver producer with Zacatecas, Chihuahua, Durango, Sonora and Oaxaca leading the production of the precious metal.

Mexico is also amongst the leading producers of bismuth, molybdenum, lead, zinc, graphite, gold, and copper. The mining sector contributes about 4% to the GDP.