Proposed Mining Royalty Hike in Mexico Could Stall $6.9 Billion in Investments, Industry Warns
Mexico’s mining sector faces significant challenges as the government proposes higher royalties that could block over $6.9 billion in investments over the next two years, according to the country’s mining chamber.
As part of its latest budget proposal, the Mexican government plans to increase mining royalties, citing rising metal prices as justification. The proposed changes include raising two royalties—one from 7.5% to 8.5% and the other from 0.5% to 1.0%.
“The measure would further strain an industry already grappling with reduced contributions and investment due to sector stagnation,” the chamber said in a statement provided to Reuters.
This move follows earlier legislative changes, including a reduction in mining concession terms from 50 to 30 years and stricter regulations on water extraction permits. Additionally, a proposed ban on open-pit mining is still under consideration in Congress.
The mining chamber emphasized that the royalty increases, combined with recent restrictions on permits and exploration, could discourage over $6.9 billion in potential investment in new projects through 2026.
Mexico, a leading global producer of silver as well as a significant supplier of copper and gold, relies on mining to contribute approximately 2.5% of its GDP. However, the chamber warned that the additional tax burden could make the country less competitive compared to mining powerhouses like Chile, Peru, and Canada.
The group represents key players in the industry, including Grupo Mexico, Minera Autlán, Industrias Peñoles, and Newmont’s Peñasquito mine. These companies are now facing an increasingly challenging regulatory environment, which could affect the sector’s future growth and competitiveness.