Newmont’s Mexican division expressed optimism on Wednesday, citing an “openness for dialogue” with the Mexican government regarding the proposed increase in mining royalties. This development comes amid concerns that the royalty hike could deter significant investments in the country’s mining sector.
The proposed increase has raised alarms within the industry, with the Mexican mining chamber estimating that over $6.9 billion in investments planned for the next two years could be jeopardized. This potential financial setback compounds existing challenges facing the sector, including past administrative decisions and looming legal reforms. Newmont, a leading global gold producer, operates the substantial Penasquito open-pit mine in Mexico. This operation yields gold, silver, zinc, and lead, processing an average of 110,000 metric tonnes of fresh ore per day. The mine’s significance underscores the potential impact of the proposed royalty changes.
Ana Lopez, manager of Newmont’s Mexican unit, affirmed the industry’s commitment to investing in Mexico. “There is a lot of interest from the companies, a lot of commitment to continue investing in Mexico,” she stated. However, Lopez emphasized the need for a conducive investment environment. “The best conditions in terms of certainty, opportunity, and collaboration are also necessary for us to continue to do so,” she added.
Addressing the royalty increase proposal directly, Lopez acknowledged the company’s obligation to comply with approved regulations. “This and any norm that is approved and applies to us, what we have to do is comply with it,” she remarked. Furthermore, Lopez welcomed recent comments by Mexican President Claudia Sheinbaum suggesting a review of a proposed legal reform that would ban open-pit mining, a practice crucial to many mining operations.
The Mexican government’s rationale for the royalty increase stems from the sustained rise in metals prices in recent years. The mining sector has already faced challenges under former President Andres Manuel Lopez Obrador’s administration, which halted the granting of new mining concessions. With President Sheinbaum at the helm, potential legal reforms pose further hurdles for mining operations in Latin America’s second-largest economy, trailing only Brazil. The ongoing dialogue between Newmont and the Mexican government represents a critical juncture for the future of mining investment in the country.
