Mining rights and titleState control over mining rights
To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?
Mexico, as a nation, is the direct owner of all mineral deposits within the national territory as provided in the Constitution. The exploration and exploitation of such mineral resources are concessional to private parties pursuant to concessions granted by the federal government.
The MBM is the agency of the federal government in charge of granting mining concessions and supervising the mining concessionaries to comply with the Mining Law while holding mining concessions, while conducting mining activities and while granting rights to third parties over the mining concessions for them to conduct mining activities, which are also subjected to the Mining Law.
Mining concessions grant their holders the right to explore and exploit all minerals and substances specified in the Mining Law, except for those reserved to be exploited by the Mexican government, such as gas derived from the exploitation of mineral coal, oil and solid, liquid or gaseous hydrocarbons.
Mining concessions do not grant the ownership or possession rights over the surface where they are located. When the concession holder does not have surface rights to access the lands where the mining concession is located, it can directly negotiate the use of land for mining activities with the owners of the surface rights. In the case that no agreements are reached for the use of the surface, mining concessionaries are entitled to start a procedure contemplated in the Mining Law to obtain the following:
- the expropriation;
- a temporary occupation; or
- an easement.
What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?
Legal information about ownership, agreements, liens and encumbrances of mining concessions is available at the Public Registry of Mining (PRM).
General mining information, including maps, mining cartography, geological and geophysical reports, information of ore deposits, technical data, tectonic and volcanic information, satellite images, hydrographic information, natural protected areas, general statistics on production, etc, for the mining districts (areas in which the Mexican territory is divided by the MBM) for mining purposes is available at the MGS through the Geoinfomex System. Official Mexican mining cartography is also publicly available at the subdirectories of the MBM in the corresponding states.
As part of their obligations before the MBM, mining concessions’ title holders shall annually submit work assessment reports containing economical information on investments incurred in their mining concessions, as well as statistical reports. Information submitted is used to create statistics on mining activities in the Mexican territory, and is used to generate public and private databases.
The MGS also conducts exploration activities in areas allotted to them by the MBM. Its results are also publicly available.Acquisition of rights by private parties
What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?
The most common way for private parties to acquire mining concessions is by staking them.
Private parties may also acquire mining concessions from the MGS. The MGS offers mining concessions to private parties through public auctions, with data derived from its own surveys and exploration activities.
Once the MBM issues the mining concessions to private parties, after complying with certain technical and legal requirements, the rights granted to their holders are freely assignable. All Mexican private individuals and Mexican entities registered before the PRM are legally capable of holding mining concessions or rights deriving therefrom. Mexican entities are those incorporated in accordance with Mexican laws. Foreign investment may participate in up to 100 per cent of the capital of a Mexican entity.
In accordance with the Mining Law, mining concessions allow their title holders to conduct exploration and exploitation works.
Process to acquire mining concessions through staking
Mining concessions are granted over free areas to the first petitioner in time of a mining claim. The location of a mining concession is determined by a fixed base point of the land that is named the ‘starting point’, which is linked to the claim’s perimeter.
The first step to acquire a mining concession through a staking is to submit an application for a mining concession.
The applications for mining concessions must be submitted before the corresponding MBM’s agency depending on the location of the claim to be staked.
A mining expert shall conduct due diligence, considering the following:
- a review of the official Mexican mining cartography in the subdirectories of the MBM in the states (see question 9);
- a recognition of the field;
- a definition of the perimeter;
- the field works; and
- a satellite GPS positioning in order to obtain the coordinates of the starting point of the claim.
If the due-diligence report complies with all applicable requirements, the MBM must issue the relevant title document within the following 15 days.
As a result of the Mexican energy reform enacted in August 2014, the MBM, before issuing a mining concession, is required to consult the Ministry of Energy (SENER) in order to verify that the area requested for a mining concession is not considered an area of interest for SENER to conduct oil, gas or power generation activities.
Since oil, gas and power generation activities are now considered a priority in Mexico, SENER may oppose the issuance of the relevant mining concession or may recommend the granting of it, excluding the area where the priority activities may be conducted, to the MBM.
The Mining Law imposes, among others, the following main obligations to title holders of mining concessions:
- exploration or exploitation activities must start within 90 days of the concession being granted and recorded before the PRM, with the obligation to conduct and evidence minimum investments in the area under the mining concession or the extraction of economically useful minerals in the amounts provided under the Mining Law and provide the relevant work assessment reports showing the foregoing on an annual basis;
- pay government mining concession’s fees, for which the amount payable depends on the following:
- the date on which the mining concession was registered before the PRM (the older the mining concession is, the higher the government fees are); and
- the surface covered by the mining concession (number of hectares) (government mining fees);
- comply with applicable legislation regarding technical, safety and environmental standards;
- provide the Ministry of Economy with statistical, technical and accounting reports in terms of the Mining Law;
- allow inspection visits from the Ministry of Economy; and
- inform SENER in the case of finding any hydrocarbons where the mining concession is located.
There are no reconnaissance or other kind of mineral licences, only mining concessions, as described above.Renewal and transfer of mineral licences
What is the regime for the renewal and transfer of mineral licences?
Mining concessions are granted for a term of 50 years from the date of their registration in the PRM, and are subject to renewal for an additional term of 50 years if:
- the holder does not incur in a cause of cancellation of the concession by any act or omission so penalised by the Mining Law; and
- the holder requests the extension within five years prior to the expiry date.
The transfer or assignment of concessions or rights thereunder may be freely made to any party having legal capacity. The transfer of mining concessions or rights thereunder shall produce legal effects against third parties, the Ministry of Economy and other government authorities upon their registration with the PRM. Owners of mining concessions shall be only recognised as so, if they are recorded as concessionaires with the PRM.
A transfer or assignment will be null and void when made to an unqualified person under the Mining Law. However, the Mining Law provides that a transfer to an unqualified person will not be null and void when it occurs pursuant to a court resolution ordering the debtor (mining concessionaire) payment of the debt, and provided further that the rights are then transferred to a capable party within 365 calendar days after the date of the issuance of the court resolution.
Government consent is not required in order to transfer a mining concession, or in the event of change of control of its holder or its parent.Duration of mining rights
What is the typical duration of mining rights?
As mentioned in question 11, mining concessions are granted for a term of 50 years from the date of their registration in the PRM, and are subject to renewal for an additional term of 50 years if the holder is not subject to cancellation of the concession as the result of any act or omission so penalised by the Mining Law and if the holder requests the extension within five years prior to the expiry date.
Mining concessions can be cancelled before expiration in the following cases:
- for not paying of government mining fees as provided in the Mining Law and the Federal Duties Law as described in question 10;
- for not filing the work assessment reports evidencing minimum investments incurred in the mining concessions as described in question 10;
- for dropping the mining concession through the corresponding administrative proceeding;
- for exploiting or extracting minerals not permitted by the Mining Law;
- if the mining concession was acquired from the MGS as mentioned in question 16, for not paying the corresponding royalties to the MGS;
- for conducting mining activities without the relevant authorisations and permits necessary to conduct them; and
- if the title holders lose their capacity to own mining concessions (eg, if a company changes its Mexican nationality, among others).
Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?
Foreign investment is allowed up to 100 per cent in Mexican companies that can acquire and work mining concessions. In Mexico, mining concessions may only be granted to Mexican individuals, Mexican companies (companies incorporated under the laws of Mexico and with corporate domicile within the country), land granted by the government to a group of individuals for agricultural and ranching purposes, agrarian communities, townships and aboriginal communities. In the case of companies, they must be incorporated in accordance with Mexican laws, and their corporate purpose shall include the exploration or exploitation of minerals and substances subject to the Mining Law. Since a Mexican company is a company incorporated under the laws of Mexico as mentioned before, there are no distinctions on the rights to be acquired by a Mexican company with 100 per cent Mexican investment in its capital and a Mexican company with 100 per cent foreign investment in its capital.Protection of mining rights
How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?
Mining rights are protected through the applicable legislation and the applicable administrative and judicial authorities; therefore, Mexican authorities are in charge of the resolution of controversies that may arise from mining operation.
In accordance with certain provisions of the Federal Code of Civil Proceedings (which provisions are applicable to mining matters), in the event of a dispute between the parties to an agreement involving mining concessions, an arbitration award cannot be homologated (executed) in Mexico since mining matters are from the exclusive competence of Federal Mexican courts.Surface rights
What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?
The mining rights covered under a concession do not include direct ownership or possession rights over the surface where a mining concession is located.
The use of the lands may be obtained through direct ownership or possession of lands (eg, lease agreements, temporary occupation agreements, easements agreements or expropriation through an administrative proceeding).
The Mexican Constitution recognises the following surface rights:
- social land granted to aborigines;
- social land granted to a group of individuals or communities;
- national land;
- federal areas, beaches and river beds; and
- private property.
The Agrarian Law governs the property rights mentioned in the first three points above. These lands can be legally occupied or acquired by private parties as provided in the Agrarian Law.
A concession holder may acquire all property rights mentioned. Typically, the consideration payable for the lands is agreed between the parties. The Mining Law provides the rules under which a mining concession holder may require the expropriation or the temporary occupation of the land when it does not reach an agreement with the landowner. In the case of expropriation by the Mexican government, the consideration is payable based on an appraisal made by an agency of the Mexican government.
The MBM may revoke the temporary occupation resolved by the agreement or to revert the ownership of the surface expropriated to its former owner in the following cases:
- if the mining works to develop are not started within the 365 days following the issuance of the relevant resolution granting the temporary occupation or resolving the expropriation of the surface where the mining concessions are located;
- if the mining works are suspended for a year or more;
- if the surface granted is destined for a use other than mining;
- if the concessions holders do not pay the consideration determined in the relevant resolution of temporary occupation or expropriation;
- if the mining concession is nullified or cancelled; and
- by a court resolution.
Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?
Beside the exploration activities conducted by private parties, exploration of national territory for the purpose of identifying and quantifying the nation’s potential mineral resources is carried out by the MGS, through mining allotments, which are issued to this entity by the Ministry of Economy, the registration whereof is published in the federal Official Gazette. No other state agencies conduct mining activities.
Once the MGS explores the relevant allotments, they are sold to private parties by way of public auctions. Mining concessionaires must pay royalties to the MGS as part of the consideration payable for the exploration activities and discoveries made by the MGS.Government expropriation of licences
Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?
In the case of mining concessions, certain government authorities (ie, Environmental Ministry, Communications and Transport Ministry, Agrarian Ministry and others), because of an event of national security or public interest, may decide to revert the concessions granted to private parties (the Reversion Decision). The Reversion Decision decree shall include the general rules to determine the consideration to be paid to the concession holder and the investments made in the concession. The depreciation of the expropriated assets, equipment and facilities attached to the mining concession shall be considered in order to calculate such consideration, through the payment of a fair market value compensation.
If the affected party agrees with the amount of consideration payable, it shall be final. If not, it has the right to file a claim before a Mexican court, which will take the final decision.
In accordance with the North America Free Trade Agreement (NAFTA), Mexico may only expropriate property in case of public interest and on a non-discriminatory basis. In such events, expropriations will require a fair market value compensation, including accrued interest. In the event of any violations of NAFTA and international laws, investors have the right to international arbitration.Protected areas
Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?
The federal government has issued specific decrees for the incorporation of natural protected areas. The federal government has established 181 natural protected areas throughout the country. Each natural protected area has zones where mining activities are forbidden or highly regulated; these limitations are applicable to private and public property within those areas.
In addition to the foregoing, there are certain areas protected by the National Anthropology and History Institute (INAH) where there are archaeological vestiges or historical findings. Each area protected by the INAH has zones where mining activities are forbidden or highly regulated. In the event that while conducting mining works within a mining concession, the mining concession holder or who is operating such mining concession finds archaeological vestiges or historical findings, it shall provide notice of such findings to the INAH. The INAH may determine if such areas shall be protected by it as mentioned above. In the event that those areas have a strong archaeological or historical potential, the INAH may request to the Mexican government the expropriation of such areas. See question 10 in relation to the areas where certain activities are conducted related to oil, electricity and power generation activities (priority activities). As mentioned in question 10, SENER may oppose to the granting of concessions within those areas or may recommend the granting of it, excluding the area where the priority activities are or may be conducted.