Social Accountability in the Mexican Mining Sector: A Fight to End Privileges and Impunity

Beatriz Olivera

Mexico is the world’s largest producer of silver and is among the top ten producers of gold, copper, lead and zinc. Since the Mexican government signed the NAFTA (North American Free Trade Agreement), Canadian mining experienced a boom in the country. There are currently 24,709 mining licenses in Mexico, 65% of them operate with Canadian capital, followed by US capital (13.2%) and Mexican ones with 9.2%.

Companies and the government argue that mining is an important source of employment and economic development for the country and a means of local development for the communities where it is carried out. However, a few weeks ago, we released a report called  the Yearbook of extractive activities 2017, in which we proved that the extraction of metallic minerals such as gold and silver, represents only 0.9% of the GDP in Mexico. Moreover, the contribution made by these activities to the public finances is scarce: barely 0.35% of the total income received by the federal government from tax payments.  If we are between the top ten producers of these minerals and the government is getting scarce revenues from mining, who benefits from these activities and, more important, why? To answer these two questions, some months ago, we, as Fundar,[1] undertook a social accountability exercise. We looked at the laws and regulations mining companies should comply with, the performance of the different public agencies regulating the mining sector, the public finances -mainly revenues and expenses- related to mining, and the socio demographic reality of the communities in which mining activities happen. Our citizen oversight exercise found that some mining companies are simply not paying the taxes they are required by law. This was confirmed by the Mexican Supreme Audit Institution’s reports that highlighted that the Ministry of Economy and the Tax Administration Service (SAT) do not have a reliable mining licenses registry, and that there are 23% of mining licenses holders that have not made their payments for taxes or duties yet, since they have not been fully identified by the government agencies.

As part of our social accountability exercise, we also monitored the Mining Fund, a fund created with the taxes mining companies must pay to the State. According to the law, this Fund must be used for development projects benefiting the populations affected by extractive projects. However, we found that these resources are used without community participation and with opacity. Some relevant findings were that there are significant deficiencies in their management; such as a) a lack of evidence-based documentation on these resources’ whereabouts ; b) differences between amounts supposedly allocated to these projects versus the amounts reported by the local governments and c) projects that are not related to local development and/or protection of the environment -in a community, for example, the money was reportedly used to build a road to the mining site, this is to say, the funds were used to benefit the mining industry-.

However, in terms of mismanagement, these are not the most worrisome findings. While monitoring the Mining Fund, it was not possible to identify the whereabouts of 1,736 million pesos allocated to municipalities. That is to say; it is not known how 52% of the total Fund has been invested.

Our project also found that, despite the huge profits mining generates for companies and increasing boom of this industry, the conditions of poverty and extreme poverty prevail in most of the municipalities where mining is carried out.  In our research we made an analysis of socio demographic conditions of the largest gold producing municipalities, we found that 76% of them have poverty levels higher than the national average. Moreover, 87.5% of municipalities where silver is extracted have poverty levels higher than the national average. This proves that mining is not that local development engine that companies and governments argue.

Furthermore, mining is causing severe human rights violations. A report from the Justice and Corporate Accountability Project (JCAP) released in 2016 found that, in the last 15 years, mining conflicts involving Canadian mining companies in Latin America have had more than 30 selective murders, more than 44 people killed, 403 injured and more than 400 arrests. In Mexico, this research documented six Canadian mining projects in which there was violence: 8 deaths, 2 disappearances, 14 injuries and 118 cases of criminalization of social or environmental leaders opposing mining projects. In conclusion, mining activities of metallic minerals in Mexico are destroying the environment, generating conflicts, leaving people and communities in poverty. Besides, they are not contributing substantially to the economy and public finances of the country. We hope that by disseminating our findings widely with the media and with policy makers we can convince them of the negative effects of these activities and encourage them to think in other types of development projects that are more amicable to communities and the environment.

[1] Fundar, Center for Analysis and Research, is a Mexican civil society organization founded in 1999. It aims to advance substantive democracy. We work on human rights, gender, accountability, land and territory, and citizen participation. For over a decade, we have monitored the extractive induestries sector in the country with a human rights approach.

Photo: View of the community of Salaverna, which has been almost fully deserted by its members because of the forced displacement generated by the mining industry. Salaverna is located in Mazapil Zacatecas, a municipality which is one of the main producer of gold and the second producer of silver in the country.

About the Author

Beatriz Olivera

She has a Bachelor and a Master’s degree in Industrial Engineering from the National Autonomous Mexican University (UNAM). She is an expert on energy issues, sustainable development and extractive industries. She has coordinated international and national campaigns on climate change and energy for organizations such as Greenpeace and Oxfam. She has coordinated projects related to transportation and energy in the public and private sector. For the last four years, she has been a Professor in the UNAM Masters’ Engineering Program, in the energy systems area. Since 2016, she is a researcher in Fundar, in the Territory, Rights and Development Program, in the extractive industries theme. She has written numerous articles related to energy and sustainable development.

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