Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
Mexico on Friday said it has prevailed in a labor dispute centered on a mine operated by one of the world’s top copper producers in which the United States had sought a probe, with a labor panel under the trade agreement between the two countries and Canada saying it lacked jurisdiction.
Last year, the United States requested a probe into alleged worker rights abuses at a Grupo Mexico mine in the central Mexican state of Zacatecas.
Grupo Mexico, a Mexico-based mining and transport conglomerate, is the world’s No. 4 copper producer.
Mexico argued that the United States-Mexico-Canada trade accord did not apply, as the alleged labor violations occurred before the pact went into effect in 2020.
“This ruling … sets a precedent of not allowing retroactivity in trade agreements,” Mexico’s economy and labor ministries said in a joint statement, adding that such cases should be avoided in labor and other trade disputes.
Work at the mine in question – the San Martin lead, copper, zinc and silver mine – stopped from 2007 to 2018 due to a strike.
Grupo Mexico had previously said the mine resumed operations in 2018 with worker approval, though the union alleges bargaining was carried out with a group of unauthorized employees.
The US complaint last year cited a request from a Mexican miners union led by Napoleon Gomez, a close ally of President Andres Manuel Lopez Obrador and currently a ruling party senator, in addition to two major US labor organizations.
A lawyer for the union told Reuters it was waiting for confirmation of the panel’s decision before commenting.
Mexican officials argued that while they found that Grupo Mexico had “repeatedly denied workers freedom of association and collective bargaining over 16 years,” the issue was being handled by national authorities.
The company applauded the Mexican government’s “successful defense of our country’s sovereignty,” in a statement on Friday.
Grupo Mexico is controlled by Mexican tycoon German Larrea.
The company said that in the panel decision the “national interest prevailed over frivolous and unfounded demands by the union controlled by Senator Napoleon Gomez.”
Mexico’s rejection of the US complaint filed in June was one of the few times since the USMCA went into effect in 2020 that it has deemed a case ineligible for review under the pact.
The USMCA is up for review in 2026, and Mexican officials said they would look to fix the “asymmetries” in the mechanism under which the US requested the review of the mine.
The treaty allows only the US to bring cases of suspected labor rights violations in Mexico, though Mexico is now looking to “employ it equally to defend migrant workers’ rights” in the US and Canada.
(By Kylie Madry and Brendan O’Boyle; Editing by Chris Reese, Diane Craft, Matthew Lewis and Leslie Adler)
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