Mining in Mexico

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PDAC

Toronto; March 2012

E. Luna

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Mining in Mexico Access to land

•  “Ownership” not really the issue

•  Three types of ownership •  Private property

•  It can, and should be, bought •  Ejidos

•  Only individual parcels can be bought •  Temporary Occupation agreements are widely used

•  Agrarian Communities •  Hardest to negotiate

•  Get a local (firm or person) to negotiate •  Language barrier •  Different culture •  Lack of knowledge of legal provisions

•  Cost of gaining access has increased •  Be prepared to pay top peso

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Mining in Mexico Royalties-1

The Economist, Leaders, February 11, 2012

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Mining in Mexico Royalties-2

•  It has happened in other countries •  Caused by high prices and economic crises •  Can not be a special tax (unconstitutional) •  In principle, we are opposed to it •  Thinking creatively

•  Design it as an additional levy on concessions •  Use it as a credit to VAT and/or other taxes •  Triggered by a minimum price •  Apply proceedings directly to Municipalities •  Has to have built-in accountability

•  Work with Congressmen is being done

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Unions •  Having a union is not unavoidable but it is difficult to escape from it

•  Three different national Unions •  National leadership weak in every case

•  One located in Fresnillo •  One located in Monterrey •  One located in Mexico City-Vancouver

•  Relations with Locals should be close and respectful •  They should decide

•  Due to current prices, great expectations about salaries and bonuses •  Tug-of-war between local and corporate management •  Agree on a collective contract that is:

•  Simple •  Understandable •  With very few different jobs

Mining in Mexico

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Health and Safety

•  Hindrances •  Machismo •  Low formal education •  Lack of training •  Health related

•  Drug abuse •  Physical conditions

•  Assistances •  Use of families •  Should be written within the Collective Contract •  Training •  Start with staff: Word convinces but example drags

Mining in Mexico

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Community Relations

•  Strongly intertwined with Access to Land •  Patronizing and Paternalism shouldn’t be applied •  Make communities part of the project

•  Mess halls •  Garbage collection •  Some freights •  General housekeeping •  Shops

•  Sewing -coveralls, vests, etc. •  Poultry farms •  Bakeries

•  Set up a team of NATIONALS to handle this matter •  Foster education, formal and informal •  Promote the incorporation of a Community Development Committee.

•  Town people •  Company •  Local governments

Mining in Mexico

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Operations

•  It is best to develop or choose a local team of operators •  The only long term solution

•  Convenient to support Mexican Earth Sciences Schools •  Students •  Teachers •  Using market oriented provisions

•  Reinforce training and development

Mining in Mexico

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Mining and environmental regulations

•  Participation in the writing of regulations is necessary

•  Mexican Chamber of Mines •  State and Federal Congressmen •  State Governors

•  Support for adequate application and interpretation

•  Mexican Chamber of Mines •  Mining Task Force of Can Cham

•  Have lawyers and advisors with the right Rolodex

Mining in Mexico

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Mexico Economic Outlook

•  Mexican-and Canadian-economy tangled with US economy •  Outlook is fair •  Government (and citizens!) has to bring about several changes

•  Privileges have to diminish •  Unions •  Government monopolies •  Big business

•  States have to be financially independent •  With accountability

•  As the economy improves, there’ll be better: •  Security •  Labor pool

•  Canadian miners in Mexico have helped in curtailing duopoly

Mining in Mexico