ALBERTO M. VÁZQUEZ AND JUAN MANUEL GONZÁLEZ OLGUÍN

Mexico 2020 | MINING | B2B

Legal entities for Mexico's mining industry face a tough fight ahead as the government has not made clear its stance on mining. However, changing the image of the industry is the first step to winning over the government's heart.

Alberto M. Vázquez
ALBERTO M. VÁZQUEZ
Partner
VHG Abogados
Juan Manuel González Olguín
JUAN MANUEL GONZÁLEZ OLGUÍN
Partner
DBR Abogados

What does VHG Abogados hope to achieve for Mexico's mining sector?
ALBERTO M. VÂZQUEZ Over the years, the mining sector has been growing, and there are many challenges and new players that may hurt the industry. Just like any other industry, technology is being developed to improve processing and production; however, people are not aware of the amount of technology the mining industry is investing in, as the sector does not need to reach the final customer directly, in comparison to sectors such as automotive or medicine. Therefore, many people, especially those who oppose the industry, still have an image of the mining industry from the 1950s. Right now, the industry has to let everyone know that there are changes happening from within the sector. VHG is the most proactive law firm in Mexico in mining and will continue with our efforts to change the image of the industry. One example is a VHG video called “Inside the Earth" (Mining in Mexico) and another one called “La Piedra" in support of camps that rescue sea turtles eggs.

Which of DBR Abogados' services enjoy the highest demand?
JUAN MANUEL GONZÂLEZ OLGUÍN The services we provide regarding mergers and acquisitions have enjoyed high demand recently. As a law firm, we deal with international and multinational companies. We are currently working on a team basis with a law firm from Brazil. It is a Canada-based company that wants to list a Mexican company on the Brazilian Stock Exchange. Many mergers and acquisitions are taking place in Mexico, which is a trend that will continue for a few years. We also work on internal matters, ensuring that the rule of law is enforced. This means we have to go to trial in some cases. For example, one of our clients, Avino Mines, suffered periodic blockades when mining unions demanded labor improvements. In such cases, we receive help from experts in labor law. Sometimes it is necessary to request help from lawyers who are experts in local issues.

What is your opinion about the latest developments in the mining sector?
AMV It needs a dramatic change from the administration. Unfortunately, many people think mining is bad, and this perhaps begins with the mining industry itself, which never saw the need to explain the difference between exploration and exploitation. Production has been falling and will continue to fall as long as Mexico does not support the industry and grant new mining concessions. There is no law impeding the granting of mining concessions, though the authority has not handed out mining titles. There are many companies interested in investing and exploring in Mexico. If a company wishes to apply for a mining concession, nothing is stopping them from doing that. However, it is public knowledge that the president has expressed a few times that no mining concessions will be granted. As long as this is the case, Mexico is sending a message of uncertainty. Thus far, we have a great Undersecretary of Mining; he has great interest in developing the sector successfully. However, on the other hand, we also have other authorities that are relevant players that are not in favor of projects. There is an internal fight and mixed messages, and this is not helpful to Mexico.

JMGO There have been many advances in the mining industry, mainly related to new exploration projects, but they have been stopped due to issues with permits. We provide support for our clients in these types of situations. We are promoting responsible mining and reaching out to local communities for support. The communities have to get in touch with the government and convince them to issue permits because new mining activity will also generate benefits for the surrounding communities. There is also a lack of favorable tax scheme for the mining sector. At present, mining companies in Mexico are subject to the same tax regime as all other Mexican companies, and such a policy discourages investors. People think that mining companies do not contribute to the country in terms of taxes, when in fact, they are subject to higher taxes in the form of mining duties.