Fuente: mexicobusiness.news

By Miriam Bello

Environmental and social best practices have become a priority for mining executives around the world. In Mexico, this is no exception. However, the companies looking to meet these high standards must overcome hurdles like a lack of new mining concessions, higher scrutiny on tax payments and the industry reforms of President López Obrador, which aim to develop the deficient regulation on social matters in a way that is still unclear for operating companies. Nevertheless, communities will remain key to this shifting regulation, providing companies with a cornerstone for their operations.

If mining companies aim to be competitive in Mexico, they must be competitive while remaining respectful of the rule of law. “Mexico has a vast legal framework for mining processes, meaning that permit holders need to work under permits, as well as be respectful of human rights, the environment, Indigenous communities and Mexican culture in general,” explained Ruben Cano, Founding Partner, CR Legal Partners Mexico.

Prior to their operation and to avoid future challenges, every company must first carry out a detailed project feasibility analysis. During this research, Rubén Alvidrez, Board Member and Independent Director, Altaley Mining, explained that companies will find that there have been no new concessions granted. Among other barriers, there are various security concerns, tax payment scrutiny and long analysis processes required to determine whether concessions were granted within the boundaries of the law.

Land rights are some of the most significant challenges companies could encounter. Therefore, “companies need to fully understand the legal, social and geographic challenges of the land and its established communities,” said Manuel Sainz de La Hidalga, Partner, O’Gorman & Hagerman. He furthermore stressed it is essential to identify land owners and distinguish between private, social and public property. Each of these schemes features different standards to be complied with if a company is to procure land rights and social licenses. Knowing how to move ahead will provide certainty and foster positive relationships with land owners, ejido communities and the government itself.

In 2021, mining companies encountered yet another subject of concern for their investments. The first Chamber of the Supreme Court of Justice of the Nation (SCJN) delivered its ruling for amparo trial 134/2021, put forward by the Nahua Tecoltemi Indigenous community, located in Ixtacamaxtitlan, Puebla. With the ruling, SCJN revoked two mining concession titles that had been granted in 2003 and 2009 to the company Minera Gorrión, the Mexican subsidiary of Almaden Minerals. According to the court’s ministers, the Mexican authorities were obliged to facilitate the right to prior, free and informed consultation of Indigenous peoples, but failed to do so. The court furthermore argued the state had violated articles 6 and 15 of the International Labor Organization (ILO) ILO Convention 169.

In the ILO Convention 169, Indigenous consultation is defined as the procedure by which initiatives, proposals for plans and programs, models of public policies and institutional reforms that directly affect Indigenous communities are presented to them with the purpose of obtaining their consent or agreement.

The Supreme Court’s new decision, while it is still not binding, established that mining concessions granted after Convention 169 which entered into force in 2014, could be canceled due to the absence of an Indigenous consultation process. “However, there are no guidelines, legal frameworks or clarity on how could companies in Mexico should comply with these obligations,” said Alfredo Phillips, Independent Director and Board Member, Almaden Minerals. As SCJN recognized, establishing consultation procedures is the responsibility of the government. Nevertheless, companies like Almaden Minerals could suffer the consequences of this process is not carried out correctly, even though no blame falls on them.

Phillips explained that there are now two crucial moments where Indigenous communities must be involved, “when the concession permit is granted and when you present the Environmental Impact Assessment (EIA).” However, he said that these moments should be clearly established in the law before any operations occur. “We already carry out social assessment for our operations, but if new rules are not clear, we cannot proceed with certainty,” Phillips added.

The government’s rule of law and companies’ compliance will create the desired level of transparency that both parties are working toward. Cano explained that there are still misconceptions that permits can only be acquired through corrupt practices. “This is completely false. Doing everything the right way, being prepared and organized and consult experts to have complete compliance during a concession is always the right route for mining companies to follow,” he stated.

“The mining industry in Mexico is the second-safest industry, according to data from the Mexican Social Security Institute (IMSS). Mining is important and part of the solution for safety issues, not the problem. By working together with the government, we would be able to create better projects, solutions and development for the communities we are in,” said Christopher Avila Mier, President of the Legislative Liaison, CAMIMEX.

Through each company’s social compliance, the authorities can be certain that the mining industry shares their interests. “Both new entrants and existing companies are changing their mindsets to have a socially-centered vision for their operations. While this might take a while to fully establish for every single mining company, the process is already happening. We could benefit greatly by working alongside the government to achieve this,” Phillips said.

There are a number of government areas toward which companies should focus their compliance. Sainz broke them down to four primary entities: the Ministry of Agrarian, Territorial and Urban Development (SEDATU), The National Agrarian Registry, which controls ejidal and communal land, The Agrarians Attorney’s Office, which protects the rights of agrarian workers and Agrarian Courts. “Through these areas, companies can ensure they are approaching the right entities and guarantee they set the same goals moving forward,” he said.

Alvidrez shared the primary points to consider when developing a strategy to approach the government. “Align the company’s objectives with those of the government, identify the economic benefits that help the community and prove how the project spurs job creation, meet the tax requirements, interact with communities, help where the Mining Fund would have supported, try to select local contractors so that the money stays in the community and approach the three levels of government to work together.”

Cano emphasizes that communities must be the center of the operation: “mining companies must include them in their long-term visions. Operators have been working for centuries and they will continue to do so. Government rules change every six years, but their focus on these communities remain the same.”

Con la participación de Pablo Gutiérrez de la Peza, socio de OGorman&Hagerman

Fuente: Mexico Business

La revista Mexico Business News publicó el siguiente artículo de Pablo Gutiérrez, socio Administrativo de O’Gorman & Hagerman, que se puede consultar en: https://mexicobusiness.news/professional-services/news/ejido-lands-and-rule-law

More than half of Mexico’s territory is social property, primarily land owned by ejido and agrarian communities. Sadly, due to circumstances well beyond their control, including the lack of resources and the harsh nature of the markets, the vast majority are unable to make a living off their land. Many are open to negotiate in relation to their land. That accounts for the supply side.

Many projects, from small hotels and ecotourism services, to large mines and industrial facilities, need land in rural areas. Increasingly, investors are willing to develop projects involving social property for its privileged location, natural resources or new infrastructure that dramatically reduces distances: paradise beaches in Oaxaca, cenotes in Yucatan, mines in Sonora and Zacatecas, and industrial parks near cities, just to name a few. That accounts for the demand side.

With supply and demand in place, for the market to properly work, the only missing piece is trust.

On the demand side, investors are wary because they lack understanding, have certain misconceptions or have heard about some really bad experiences. Many believe there is no law governing ejido lands, and that agreements will be breached so it makes no sense to follow the rules and regulations. Some believe that ejido members are stubborn, deceitful and not to be taken at their word. That many will ultimately try to take advantage of them.

On the supply side, ejido members are wary of their counterparts for very similar reasons. Many are in helpless situations and are easy prey to abusive and opportunistic negotiators. Others are unaware of the real value of their land. Some give it away for free and others try to speculate with the land as if it were bitcoin. Land belongs to those who work it, and its value depends on what is or can be done with it.

What Is Social or Agrarian Property?

Social property is land, mostly located in rural areas, that is owned by ejidos or communities, by endowment or recognition of the Mexican government. An ejido is a legal entity formed as a type of partnership among at least 20 Mexican individuals, originally farmers and natives, whose land is specially protected by the Agrarian Law.

Each ejido acts through its bodies: Assembly, Ejido Council and Supervisory Board. The Assembly is composed of the ejido members — from 20 to hundreds — all with equal rights in the Assembly, but diverse rights over its land. The Ejido Council is formed by three members, elected democratically for three-year periods.

No two ejidos or agrarian communities are the same. Within the same framework, each has its unique characteristics: large and small, organized and fragmented, open to new ventures and very zealous of their traditions, peaceful and conflictive. Its members are a fairly representative sample of Mexican society: rich and poor, formally educated and simple farmers, hard workers and lazy. Most love parties and a good laugh. Many are controlled by men, but quite a few have very active women. They all form ever-evolving communities.

Investing in ejido land without knowing its legal and social characteristics is as reckless as doing so in a partnership without knowing its people  — shareholders, board, employees and customers — rules, bylaws, financial statements and agreements, culture and processes. It is always important to know the history, needs and interests of each ejido and its members. The legal structure of its land, past and current conflicts, and the type of ownership in place, and whether titles match reality. Acquiring rights over ejido land always implies becoming part of its community, with its troubles and expectations.

As any business needs a product-market fit to really thrive, in this arena there must be a land-investment fit for things to work out as expected. Internal disputes, historical conflicts, obscure interests, negative experiences and many other factors can make the barriers to entry too high to be worth the effort. Merely traveling to some locations can prove cumbersome; acquiring universally enforceable property rights is all the more difficult.

Can This Type of Land Be Trusted?

I firmly believe so. In many cases, even more than private properties in rural areas.

Contrary to what many think, as in many other Mexican realities, there are, of course, rules and laws, some written and many fixed in traditions. It’s always a challenge to know how they work. They are rarely the same, sometimes very complex and almost never applied uniformly. Some adjust to suit the realities and magnitude of each project. Some deals are only available to ordinary people, while others only to very large companies. Securing the land to build cottages requires a whole different set of abilities than doing so for a mine or a large industrial complex.

In my experience, projects that fail rarely have land rights properly secured and in place. Many legal and social conflicts could be avoided if all parties negotiated based on a deep understanding of each other, treated each other with respect and complied with all applicable rules and regulations. It is not only about purchasing land, setting boundaries and taking isolated actions pertaining to social responsibility. It is, rather, about building strong long-term trusting relationships and developing projects with social impact. Ultimately, it is about generating shared value and seeking to reduce, with every project and at every level, the enormous inequality gap that causes so many problems in Mexico and elsewhere.