Mexico: New Mining Law, same old extractivism
The open pit at the Herradura Mine in Caborca, Sonora. Photo: Heriberto Paredes Coronel.
Opinon • Ramon I. Centeno • August 23, 2023 • Leer en castellano
If anyone is resting easy after the publication of Mexico’s new mining law, adopted in April, it is mining companies themselves. They would like to have won more, but the gains made over decades are safe, and they continue to enjoy many privileges.
More than three quarters of Mexico's mining production consists of gold (28.4 percent), copper (27.7 percent) and silver (20.4 per cent). Zinc, iron, molybdenum, lead and fluorspar account for one-sixth of production, and the rest of the minerals extracted represent a tiny amount of total production.
What is new in Andrés Manuel López Obrador presidency is that his government has not granted any new mining concessions. Nor has it canceled any existing ones or increased state participation, with exception of lithium, which is dazzling in terms of publicity and irrelevant for public finances.
The amount of Mexican territory in the hands of mining companies has reduced from 10.6 to 8.6 percent since AMLO took office due to concessions expiring or becoming inactive. Extractivism, without changing its character, has paused its territorial expansion.
But production has not fallen. On the contrary, the last few years have seen an increase in the value of mining exports (a 22.5 percent increase in 2021 over the year prior, for example).
Official propaganda makes it appear that a historic change has occurred with regards to mining, just as it does on other important issues. In fact, Mexican progressivism is (much) to the right of South American progressivism and (even further) to the right of its own predecessors.
What is neo-extractivism?
In Latin America, mining is often understood through the concept of neo-extractivism. Coined during the first wave of progressive governments that came to power in South America in the early aughts, neo-extractivism suggested change in the extractive industries. But just what is new about "neo" extractivism?
Unlike traditional extractivism carried out by private companies, the new extractivism is carried out by the state. Both share the same noun, extractivism, which refers to an economic activity focused on the exploitation and export of raw materials to the international market.
Common to Latin America and the rest of the Third World, the denunciation of (old) extractivism was the main issue on which dependency theory—arguably the most influential Latin American contribution to the social sciences—was based. In this regard, the classic text was Eduardo Galeano's 1971 The Open Veins of Latin America.
More poetic than analytical, this text summed up the understanding of a generation:
“Our systems of inquisitors and executioners do not work only for the external market; they also provide ready wellsprings of profit that flow from foreign borrowings and investments in dominated internal markets.”
Drawing on this historical panorama, neo-extractivism proposes a rupture (the "neo") and a continuity (extractivism). That which is new—the rupture—is the shift of private interests (almost always foreign) toward the background, subordinated to the public (national) interest.
Neo-extractivism is thus a strategy of progressive governments to attract resources and finance greater social spending. The nation state, and not the foreign company, became the central actor and main beneficiary of extractivism.
That which remains—the continuity—is dependence on the extraction of raw materials for economic development, with all its attendant ecological problems (environmental deterioration) and social problems (including the displacement of entire—often Indigenous—populations).
Neo-extractivism was the logic applied by Evo Morales in Bolivia with regards to gas, Rafael Correa in Ecuador with regards to mining, Hugo Chavez in Venezuela with regards to oil, and so on.
The legacy of Mexico’s post-revolutionary constitution
What’s interesting is that in the 20th century, Mexico experienced more radical policies than the South American neo-extractivism of the 21st century. The 1910 Mexican Revolution gave rise to a regime that needed to redeem itself as both heir and promoter.
Article 27 of the 1917 Constitution left no room for doubt. "The ownership of lands and waters... originally corresponds to the Nation," it reads. It goes on to state: "the Nation has had and has the right to transfer the domain of these lands and waters to private individuals, constituting private property.” As if that were not enough, it made explicit the grounds for expropriation "for public utility and with compensation."
This approach, devised in relation to the problem of land distribution, would be extended to all natural resources. The Revolution produced a constitution that would allow, without the need for legal acrobatics, decisions such as the expropriation of the oil industry in 1936. It was enough for that decision to be justified on the grounds of "public utility." The public took precedent over the private.
It is no coincidence that one of the first major neoliberal reforms to Mexico’s Carta Magna was the modification of Article 27 in 1992, which made it possible to buy and sell land redistributed as part of the Revolution. That constitutional reform gave rise to the expansion of mining in Mexico.
But the absolute right to private property has yet to be fully restored in Mexico. Mexican constitutionalism remains steeped in the original Article 27 and, today, private ownership over natural resources is relative; it is only the right to use a property that "corresponds originally to the Nation." The nation, if it chooses, can "transmit the domain" of its property "to private individuals."
What this means is that mining companies are not the owners of mines, rather they have the right to exploit them so long as said right is granted by the nation. This is the basis for the "concessionary" regime. Individuals are literally "granted" the right to exploit something that is not theirs. At any time, "due to public utility," this right can be returned to the public domain, its first and true home.
When Lázaro Cárdenas expropriated oil in 1936, he went further than the South American progressives of the 21st century. South American progressivism did not expropriate foreign companies, although it did reduce their participation. The regime of the Institutional Revolutionary Party (PRI), on the other hand, went so far as to expel foreign capital and assume a state monopoly of industries such as oil, electricity, etc.
AMLO yields to transnational mining interests
Unlike with oil or electricity, the Mexican mining sector was never a government monopoly. Neoliberalism could not privatize this already privatized sector. What it did do was to extend its area of operation and introduce new technology, such as the use of cyanide and open-pit mining.
What could neo-extractivism have looked like under AMLO?
I can imagine two scenarios. In one, the most profitable mines would have been expropriated and become state property. In the other, more in sync with moderate progressivism, a high tax on production by mining companies could have been levied, increasing government revenue. In Bolivia under Morales, for example, royalties from gas companies rose from 18 percent to 50 percent, a substantial increase.
Compared to the Bolivian gas reform or to the total expropriation of Mexican oil under Cárdenas, mining under AMLO treads the well worn path of old extractivism. The Mexican government has confirmed that mining companies pay practically no taxes. The new Mining Law has only slightly tweaked this fiscal impunity by introducing a five percent tax on production, to be doled out to communities that reside in concessioned territories.
Of course mining companies would like to avoid this tax, as well as any limits placed on their territorial expansion. But compared to South American progressivism, AMLO's five percent is tiny. And compared to the PRI of old, it is only perceptible with a microscope.
The suggestion by progressive commentators, who claim the new Law is regrettable but AMLO's original proposal was radical, is wrongheaded. The initial proposal was also to the right of South American progressivism, if just a little less so: the tax to be paid to communities would have been 10 percent, and mining would have been restricted in areas with water scarcity. Be that as it may, the fact is that AMLO applauded the new Mining Law when it was passed, and has defended it in public.
The only hint of mining neo-extractivism in Mexico is with regards to lithium, for which a public company, Lithium MX, was created last year. It will not be a monopoly and will partner with private companies for exploitation, but this is still years away (if it happens at all). Mexico’s lithium reserves are difficult and expensive to process. If gold or silver mining had been nationalized, we would be talking about a major event. Lithium is insignificant in comparison, a flash in the pan, something that appears to be more than it is. A publicity stunt.
So how has the mining regime changed under AMLO? Very little. It continues to operate as before. Have we gone from extractivism to neo-extractivism under his government? No, we have not.
Mining in Mexico has not moved an inch from the old definition of extractivism, pure and simple. The new Mining Law does not alter its character. It is no coincidence that during this sexenio, Mexico has become the deadliest country for environmental activists globally. After all, we’re still living under neoliberalism.
