Mexican President Andrés Manuel López Obrador submitted bills to Congress intended to further curtail the rights of private investors in the mining sector and beyond. As part of his resource nationalism agenda, on display in the energy sector at first, López Obrador has also nationalized lithium reserves and created a state‑owned company to lead development of those reserves. The new bills, which target other minerals and concessions in the country, have been met with shock and disappointment. If passed as drafted, and to the extent the proposed amendments are implemented to restrict vested rights arising from pre-existing mining and potentially other concessions, these bills may result in the expropriation of foreign investments and other breaches of Mexico’s obligations under applicable international investment agreements.
On Tuesday March 28th, López Obrador sent to the Chamber of Deputies a bill seeking to reform the Mining Law, the National Water Law, the General Law of Ecological Equilibrium and Environmental Protection, and the General Law for Prevention and Integral Management of Waste Residues (the “Mining Bill”).
The Mining Bill will be discussed and reviewed by four Committees in the lower house – three of them presided over by López Obrador’s party, MORENA, or allied parties – giving it a relatively easy path forward. The Mining Bill requires a simple majority to be approved, and MORENA and its allied parties have the required votes to pass it. Considering that the current legislative session ends on April 30th, it is possible that the bill will move fast through the Chamber of Deputies.
In the Senate, the Mining Bill might face some opposition but probably not enough to make substantial changes as most of the commissions where it will be discussed are also presided over by MORENA or its allies.
Around the same time, López Obrador also sent to the Chamber of Deputies a bill that includes sweeping changes to administrative regulations, including rules for concessions, permits and other authorizations, which could impact the mining, infrastructure and energy sectors, among others (the “Administrative Law Bill”). While MORENA has enough votes to pass the Administrative Law Bill as well, it may face more resistance, particularly in the Senate.
Continue Reading Mexico: Proposed Changes to Mining, Environmental, and Administrative Laws Increase Regulatory Risk, Impact Private Participation in Regulated Sectors, and Could Lead to Investment Claims