Article 27: Mining Exploration vs. Exploitation

• Article 27 of the Mexican Constitution governs mining matters and is of public order.
• Compliance with Article 27 falls to the Federal Executive through the Secretary of Economy.

Exploration vs. Exploitation

• Exploration is the initial phase of investigating mineral resources in an area.
• Geological, topographical, and geophysical studies are conducted during exploration to determine the quantity, quality, and location of minerals.
• Exploration involves drilling, sampling, and other methods to assess the potential of a deposit.
• The main goal of exploration is to identify areas with sufficient economic potential for exploitation.
• Exploitation is the phase following exploration, confirming the economic viability of a deposit.
• During exploitation, minerals are extracted using suitable methods like underground or open-pit mining.
• Exploitation includes constructing infrastructure such as mines and processing plants, as well as managing extracted resources.
• Exploitation aims to efficiently and profitably obtain and process minerals.
• Exploration is about the search and evaluation of resources; exploitation is about extraction and commercial use.

National Patrimony

• Lithium is a chemical element considered national patrimony in Mexico since the constitutional reform of 2022.
• This makes lithium, valuable for electric car batteries and other technologies, the exclusive property of the Mexican State.

Exclusive Rights

• Exploration and exploitation of mineral resources in Mexico are exclusive to the country.
• According to Article 27 of the Constitution, natural resources, including minerals, are the property of the nation.
• The Mexican government has the exclusive right to explore and extract these resources.

Responsibilities of the Secretary

• Promote investment within Mexico and abroad to aid the country's economic growth.
• Develop and apply commercial policies to improve Mexico's trade relations with other countries.
• Ensure fair competition among companies, preventing market control.
• Support industry growth and foster economic development in different regions to balance national progress.

Mexican Geological Service (SGM)

• The SGM studies Mexico's geology and natural resources and provides information on geological and environmental hazards.
• The SGM's legal address is Avenida de los Insurgentes Sur 890, Colonia del Valle, Mexico City.

Head of SGM

• The President of the Republic is responsible for appointing the head of the General Direction of the Mexican Geological Service.

Holders of Mining Concessions

• Legally established companies under Mexican laws are considered qualified to hold mining concessions.
• These companies must have a social objective related to the exploitation of minerals or substances subject to the Mining Law.
• Companies must have their legal domicile in the Mexican Republic.
• When foreign investors are involved, it must comply with material law regulations.

Mining Concession Application

• The applicant's information (name, address, nationality) is required.
• Area Description (location and extension)
• Type of minerals to explore or exploit.
• Detailed work plan.
• Title of ownership or right over the land.
• Proof of payment of corresponding fees.

Reporting

• Semiannual reports are submitted in January and July each year.

Duration of Mining Concession

• An assignment title is valid indefinitely unless there is no public use, public interest, social interest to safeguard, or national security reasons that justify it.
• The duration of a mining concession in Mexico is 50 years, starting from the date it is granted.

Mining Concession Renewal

• A mining concession is renewable in Mexico.
• The extension period is 50 additional years, with compliance of the Mining Law conditions
• The application must be submitted before the initial concession period ends.

Rights of Mining Concession Holders

• Explore and exploit minerals in the granted area.
• Transfer, lease, or assign concession rights.
• Receive legal protection over the concession.
• Request extensions for 50 additional years if requirements are met.

Public Mining Registry

• Granted mining concessions.
• Modifications to mining concessions.
• Assignments of rights over the concessions.
• Extensions of mining concessions.
• Suspension or cancellation of concessions.
• Transfers or changes of ownership of the concession.
• This registry aims to give publicity and legal certainty to mining rights in the country.

Public Access

• Any interested individual or entity may consult the Public Mining Registry to know the legal status of a mining concession.
• Government authorities and entities related to mining and natural resources.
• Companies involved in the mining sector that need information about concessions.

Transparency

• The registry is public, providing transparency and legal certainty over mining rights.

Authority to Appoint Inspectors

• Secretaría de Economía has the authority to designate inspectors who oversee compliance with mining laws and regulations in the country.

Penalties for Violations

• Fines.
• Temporary suspension of mining activities.
• Revocation of the mining concession.
• Other administrative actions depending on the severity of the infraction.
• Sanctions vary based on the nature and severity of the infraction and are imposed by the Secretaría de Economía.

Mine Closure

• Is the responsibility of this titled party, in accordance with the regulations established by the Secretaría de Economia.

Penalties for Unauthorized Mining

• Illegally extracting, selling, or trading minerals faces a penalty of five to ten years in prison
• a fine of five percent of the total annual income plus ten thousand times the daily value of the Measurement and Update Unit.

Granting Mining Concessions

• Secretaría de Economía grants mining concessions through public tenders or direct requests, as per the Mining Law.

Land Contests

• If a terrain subject to a contest is located in an inhabited area or occupied by an indigenous or Afro-Mexican community, the winner must request land use permission from the community.
• This permit must be granted by the community, following the procedures established by the Law on the Rights of Indigenous and Afro-Mexican Peoples and Communities
• The above includes free and informed consultation, in accordance with national and international law.

Official Publication

• Mining concessions granted in Mexico are published in the Official Federal Diary (DOF).
• This publication is mandatory to ensure administrative transparency.

Technical Standards

• Secretaría de Economía must publish technical standards for mining reports in the DOF.
• Assurances are made that the standards are publicly accessible and available to all needing to meet legal and technical requirement in the Mining Law.

Representation of Geographic Coordinates

• Geographic coordinates are represented in degrees, minutes, and seconds.
• Coordinates can also be expressed in decimals, especially when greater precision is required, such as in geographic information systems (GIS) or digital maps.

Point of Origin

• Must be linked to a geographic coordinate system and an official geodetic reference point
• This ensures the correct location and delimitation of the mining concession area.

Legal Authority

• PERITOS are professionals with technical knowledge and experience in the mining area.
• The above are designated by authorities, such as the Secretaría de Economía or the courts.
• They carry out evaluations and expert opinions in legal or administrative procedures related to mining.

Contents of Mining Concession

• Applicant Information (name, address, etc.)
• Description of the requested area (location and coordinates).
• Type of mineral to explore or exploit.
• Detailed work plan.
• Ownership or right over the land.
• Payment of corresponding fees.

Indemnization

• The amount of compensation in an expropriation for public benefit is established by an appraisal commission designated by the government
• In case of disagreement, one can appeal to the courts.

Professions Equivalent for Concessions

• Mining Engineer
• Geologist
• Geophysicist Engineer
• Metallurgical Engineer

Sector Institutions

• Secretaría de Economía: Regulates concessions and mining policies.
• Servicio Geológico Mexicano: Generates geological and mining information.
• Comisión Federal de Electricidad (CFE): Related to mining in energy areas.
• INEGI: Provides data and geospatial cartography.
• Dirección General de Minas: Regulates and issues mining concessions.