Mexico's Mining Crackdown: Investors Urged to Dump Silver Mining Stocks Operating in Mexico.

Mexico's Fourth Transformation Dismantles Foreign Mining Concessions, Nationalizes Critical Resources, Signals Comprehensive Restructuring of Mineral Extraction Rights for U.S. and Canadian Companies

Foreword:

Through meticulous investigation and persistent analysis, my ongoing research has systematically unraveled Mexico's resource nationalism, progressively transforming my initial 50% probability assessment to a near-certainty 90% conclusion about Mexico on task for nationalizing their silver, gold and copper mines.

Mexico's political landscape has undergone a seismic shift in recent years, with the rise of Andrés Manuel López Obrador (AMLO) and his Movimiento de Regeneración Nacional (Morena) party. This progressive wave, dubbed the "Fourth Transformation," has sent shockwaves through the mining industry, particularly for U.S. and Canadian-owned operations in Mexico.

The Fourth Transformation follows three previous pivotal moments in Mexican history. The Independence movement (1810-1821) liberated Mexico from Spanish colonial rule. The Reform period (1858-1861) separated church and state, establishing a secular government. The Mexican Revolution (1910-1920) overthrew the dictatorship and instituted land reforms.

AMLO's Morena party emerged as a grassroots coalition, uniting campesinos, activists, peasants, agricultural workers, factory laborers, marginalized groups, women, and indigenous peoples. This diverse alliance challenged the status quo represented by the long-ruling PRI and PAN parties, which had historically aligned with foreign interests and investment

The Morena victory marked a significant departure from Mexico's traditional alignment with imperialistic regimes and foreign investors, particularly in the resource-rich mining sector. AMLO's campaign resonated with voters through key phrases like "securing Mexico's energy future" and "the resources of Mexico belong to the people of Mexico." He called on citizens to be "defenders of the territory" and "guardians of the territory," emphasizing national sovereignty over natural resources.

This nationalist approach has manifested in a series of bold moves. Following the precedent set by the nationalization of oil in the 1930s, AMLO's government nationalized lithium in 2022 and electricity in 2023. The administration has also proposed a ban on open-pit mining and, in a dramatic final act, seized assets of a rock quarry in AMLO's last week of presidency.

These actions have created a challenging environment for foreign-owned mining operations, particularly those from the U.S. and Canada. The new mining laws have introduced additional complexity and increased government control, limiting concessions to specific minerals and shortening their duration.

This shift has raised concerns about long-term investments and operations in Mexico's mining sector.

The appointment of María Luisa Albores González, a campesino herself, as the head of permitting mines after serving as the Minister of Social Development under AMLO, further underscores the government's commitment to prioritizing local interests over foreign investment. - Jon Forrest Little

Her background and perspective align closely with the grassroots movement that brought Morena to power.

The continuation of this progressive agenda under President Claudia Sheinbaum Pardo suggests that the challenges for foreign mining companies are likely to persist. Sheinbaum's recent call for "parts of the U.S. to be renamed Mexican American" indicates a continued emphasis on asserting Mexican identity and interests, even beyond national borders.

For U.S. and Canadian mining companies, this new political reality in Mexico presents significant hurdles. The nationalization of key resources, stricter regulations, and a shift in priorities towards local communities and environmental concerns have upended the previously favorable operating environment. Companies now face the prospect of reduced concession periods, increased government oversight, and asset seizures are now very likely if not a lock.

Moreover, the grassroots nature of Morena's support base means that local communities now have a stronger voice in resource management decisions. This shift will lead to increased conflicts between mining operations and local populations, particularly in areas with significant indigenous presence or environmental concerns.

The Fourth Transformation's focus on "securing Mexico's energy future" and treating natural resources as belonging to "the people of Mexico" signals a long-term commitment to resource nationalism.

This stance is likely to continue reshaping the landscape for foreign mining interests in Mexico, requiring companies to adapt to a new paradigm that prioritizes national interests over foreign profits.

As Mexico asserts greater control over its natural resources and redefines its relationship with foreign investors, U.S. and Canadian mining companies must navigate an increasingly complex and potentially hostile operating environment. The era of easy access to Mexico's mineral wealth appears to be coming to an end, replaced by a new order that places Mexican sovereignty and local interests at the forefront of resource management decisions.

Citations:
https://www.afslaw.com/perspectives/international-arbitration-dispute-resolution-blog/mexicos-new-mining-laws-additional
https://clacs.berkeley.edu/sites/default/files/publications/brlas2019-dresser-03-19-20_0.pdf
https://en.wikipedia.org/wiki/Morena_(political_party)
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https://www.cato.org/policy-report/november/december-2019/amlo-fourth-transformation-mexico
https://americasmi.com/insights/mexico-nationalization-of-lithium-opportunities/
https://www.cato.org/sites/cato.org/files/2019-12/cpr-novdec2019-1.pdf