Grounds for cancellation of a mining concession in Mexico

Mexico’s Mining Law establishes new grounds for cancellation of a mining concession in Mexico.

A first action derived from these changes was the cancellation of nine concessions to the Chinese company Ganfeng Lithium, which was building the Sonora Lithium Project.

Thus, the new Mining Law specifies and expands the grounds for cancellation of the mining concession as follows:

• Failure to make timely payments of contributions for two consecutive fiscal years.
• The mining concession is also cancelled if the reports to which the concessionaire is obliged under the terms of this Law and its Regulations are not submitted for two consecutive years or five non-consecutive years.
• Failure to initiate the corresponding work within one year from the effective date of the concession or assignment.
• The cancellation proceeds if the works object of the concession are not performed in a period of two consecutive years.
• Failure to submit to the Ministry of Economy the Mine Closure Plan within two years and up to one year prior to the closing of operations.
• Not having the water concession for industrial use in mining in force.

Mining concession

In addition, the cancellation is viable due to the existence of an imminent risk of ecological imbalance, or of irreversible damage or deterioration to natural resources, cases of contamination with dangerous repercussions for the ecosystems, their components, surface or subway water systems, or for public health, in accordance with the provisions applicable to the matter.

In this case, the Ministry of the Environment and Natural Resources (Semarnat) will notify the concessionaire of the occurrence and will grant it a term of three months to carry out the appropriate prevention or remediation actions, with the warning that, if it fails to do so, the concession will be suspended for a term of six months and, once the suspension has been ordered, the concessionaire must carry out the appropriate prevention or remediation actions within the aforementioned period; if it fails to do so, the concession will be cancelled.

Another cause is committing any of the infractions set forth in Article 55 of the Mining Law.

On the other hand, the power of the Ministry of Economy to verify compliance with the duties and obligations imposed by the Mining Law, as well as to sanction non-compliance, was increased from five to 10 years.