Mexico's plan for a ban on open pit mining was not included in a list of 100 pledges outlined by incoming President Claudia Sheinbaum on Oct. 1, the day of her inauguration.

Sheinbaum signaled in her campaign that she supported the policies of her predecessor, President Andrés Manuel López Obrador — also known by his initials AMLO — who took a hard line on the mining sector, including pushing for a ban in Mexico's legislature. Both are members of the Morena party, which dominates the country's Congress.

While analysts said they still expect Sheinbaum to hew closely to AMLO's policies, the new president may take a different approach on certain issues, including her predecessor's proposal to ban open pit mining. A ban would affect future mining operations, and the possibility has caused concern among the country's copper and gold miners. Mexico is a major global producer of both metals.

The absence of the ban among Sheinbaum's pledges is good news for the country's mining sector, analysts told S&P Global Commodity Insights.

"I'm not sure that she's willing to fight that fight right now," said José Sevilla-Macip, a senior research analyst at S&P Global Market Intelligence who focuses on economic and country risk in Latin America and the Caribbean.

Mining challenges

AMLO put mining in the crosshairs. The former president and his party canceled lithium concessions — a move that is now under arbitration — and launched a state lithium miner. AMLO, concerned about the impact of mining on the environment, pumped the brakes on permitting new open pit mines and, in a bill now before Congress, sought a ban on open pit mining.

Mexico's open pits produce large amounts of copper and gold, among other metals, and they include Southern Copper Corp.'s Buenavista copper mine, Fresnillo PLC's Herradura gold mine and Newmont Corp.'s polymetallic Penasquito mine.

In 2023, the country produced 203.4 million ounces of silver, 971,922 metric tons of zinc, 17,497 metric tons of molybdenum and 724,882 metric tons of copper, according to Market Intelligence data. Mexico's silver production represented 23.7% of the global total for the year, its zinc output accounted for 7.7% of the total, and molybdenum and copper production represented 7.2% and 3.2%, respectively, of the global total.

"It means something" that Sheinbaum did not mention the proposed open pit mining ban, said Douglas Coleman, founder of the Mexico Mining Center and a geological engineer who consults for financial firms.

Political choices

Whether the ban moves forward will in part hinge on the Morena party and whether they make the law a priority, Sevilla-Macip said.

"I don't see her trying to pass this right away," Sevilla-Macip said, adding that it would likely be up to Sheinbaum to drive lawmakers to vote on the bill.

Sheinbaum could not be reached for comment.

If the ban does pass, analysts said they doubted it would be retroactive as this could expose the government to being sued by owners of open pit mines. Analysts said the ban as currently configured would not be absolute as it gives Mexico's executive branch some wiggle room to undo the ban in cases where the government orders an exception.

"It is a very important caveat in the sense that it basically bans it but allows it if the government wants," Sevilla-Macip said.

While analysts underscored that Sheinbaum is very much in AMLO's mold — a supporter of leftist policies — they noted that the new president is more technocrat than populist and may be more open to dialogue over some issues.

"She has been reassuring to international investors, and she's very much in favor of the energy transition metals," Coleman said.

Sheinbaum flagged Mexico's lithium and copper sectors as priorities in her inauguration speech.

Peter Megaw, a veteran of Mexico's exploration industry and the former chief exploration officer of MAG Silver Corp., said he doubted that Sheinbaum would quickly make her policies on mining clear.

"There are many more pressing problems," Megaw said, citing "nightmare" issues with drug cartels among other things. "Pretty much everyone I talk to on the Mexican side says it'll be six to nine months before we have a good idea which way she will move. The biggest question now is how far and how fast she distances herself from AMLO, including if she does."

On the horizon

Beyond the open pit mining ban, other high-profile issues for miners in Mexico include the country's contentious judicial reform and potential regulation of sometimes scarce water resources.

In September, Mexico's Senate approved AMLO's judicial reform that would have judges elected instead of appointed. The new system has yet to be put to the test, but analysts said it could have consequences for how the judiciary handles mining-related disputes. The judiciary has curbed the government's reach, analysts said, but newly elected judges could take a different approach.

"The judges [could] become more worried about [their] next election than about being impartial on their decisions," Coleman said. "That could have a negative effect on the mining industry."

As for water rights, Sevilla-Macip said Sheinbaum committed to organize water consumption already assigned under concessions. It is not clear what Sheinbaum meant exactly, Sevilla-Macip said, but the policy priority could be troubling for the mining sector, given the huge amount of water often required to process minerals.

"We expect risks of revision or even cancellation of water concessions to mining companies to increase, particularly in states in which there is very significant water stress," Sevilla-Macip said, pointing to states such as Zacatecas and Sonora.

Mining companies contacted by Commodity Insights did not respond to requests for comment.