Mexico And El Salvador Ponder Different Mining Stances

Mexico's President Claudia Sheinbaum has announced a review of a controversial bill to ban open-pit mining. Congress approved the bill in July after debating balancing environmental protection with economic priorities.

"Open-pit mining warrants a thorough review, as activities such as sand extraction for cement production and lithium mining—critical for national development—are conducted using this method. It is vital to assess the specifics of the constitutional reform's provisions," Sheinbaum said.

Mexico's mining industry is a pillar of its economy, accounting for around 8% of its industrial GDP. In 2022, mining exports totaled $17.6 billion, generating a trade surplus of $12.8 billion. It directly employs over 370,000 workers and supports millions more in related industries such as logistics and equipment manufacturing.

Large operating open-pit mines include Newmont's NEM Peñasquito and Southern Copper's SCCO Buenavista. The ban would likely stop the San Nicolás copper-zinc project, a 50-50 partnership between Teck Resources TECK and Agnico Eagle AEM.

CAMIMEX, Mexico's primary mining chamber, warned that an outright ban could reduce GDP by 1% and threaten nearly 200,000 jobs. Open-pit mining accounts for 60% of the country's mining production value and is critical for extracting key resources like gold, silver, copper and strategic minerals like lithium.

Under former President Andrés Manuel López Obrador (AMLO), Mexico's mining sector faced heavy restrictions. In 2023, AMLO nationalized lithium, declaring it a strategic resource for Mexico's energy independence and banning new concessions for private companies.

He also established a state-run lithium company and canceled multiple existing concessions, triggering international arbitration disputes.

While the bill passed Congress during his administration, Sheinbaum took over in October, becoming the first female president.

Unlike AMLO, she faces economic difficulties at the beginning of her six-year term. Without foreign capital, it will be hard to provide quality jobs, education, and healthcare.

Meanwhile, El Salvador's President Nayib Bukele is pushing to go in the opposite direction. In 2017, his predecessor implemented a total mining ban to protect the country's water resources.

Still, Bukele, a famous Bitcoin advocate, claims that the untapped mineral reserves could transform the economy.

"We potentially have the largest gold deposits per square kilometer in the world," he stated, arguing that responsible mining could generate $131 billion—equal to 380% of the country's GDP—from just 4% of identified reserves. Earlier this year, Bukele secured the second term, winning 84.65% of popular votes. With control over Congress, lifting the ban seems inevitable.

However, in contrast to Mexico, El Salvador is a small country, largely dependent on the Lempa River as a primary water source. Any large-scale operations, particularly in the gold-rich north of the country, could pollute this water flow and cause more problems for what it is worth.

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