Real Estate & Infrastructure

Mexico

Mining Law in Mexico: An overview

Table of Contents
A. Introduction ............................................................................................................................................ 1 B. Background ............................................................................................................................................ 1 C. Legal framework .................................................................................................................................... 2 I. II. III. IV. V. Constitution .................................................................................................................................. 2 Mining Law .................................................................................................................................. 2 Regulations ................................................................................................................................... 3 Handbook of Services to the Public in the Area of Mining.......................................................... 3 Foreign Investment Law ............................................................................................................... 3

D. Administrative Agencies ........................................................................................................................ 4 I. II. III. IV. V. VI. Ministry of Economy (the Ministry) (formerly known as the Ministry of Commerce and Industrial Promotion).................................................................................................................... 4 General Coordination of Mines .................................................................................................... 4 Public Registry of Mining (the Registry).................................................................................. 4 Mexican Geological Service......................................................................................................... 5 The National Property Managing and Appraisal Institute (Instituto de Administracin y Avalos de Bienes Nacionales - INDAABIN) (the INDAABIN) ............................................ 5 Mining Promotion Trust ............................................................................................................... 5

VII. National Institute of Statistics, Geography and Information (Instituto Nacional de Estadstica, Geografa e Informtica - INEGI). ............................................................................................... 5 E. Persons eligible to obtain mining concessions and related property rights ............................................ 6 F. Scope and types of concession ............................................................................................................... 7 I. II. Land subject to concession. .......................................................................................................... 7 Types of concession...................................................................................................................... 7

G. Minerals covered by a concession .......................................................................................................... 8 I. II. Minerals allowed for concession .................................................................................................. 8 Minerals excepted for concession................................................................................................. 9

H. Rights and obligations of concessionnaires............................................................................................ 9 I. II. I. J. Rights under concessions.............................................................................................................. 9 Obligations of concessionaires. .................................................................................................. 10

Procedure to obtain mining concessions .............................................................................................. 11 Real Property related to mining concessions........................................................................................ 12

A. Introduc

tion

Mexico has a total geographic area of approximately 1,964,375 square kilometers. According to nonofficial information, only about 15% of such area has been explored and approximately 60% of Mexicos area has geological conditions for the existence of ore deposits, and only 4% of Mexicos surface has been fully explored for ore deposits. Due to the creation or amendment of the applicable legal framework including the North American Free Trade Agreement, which allows foreign investors to participate in the capital stock of Mexican companies, mining exploration has become a bundle of opportunity for foreign invertors. In addition, Mexico has become an increasingly attractive location to invest in mining operations, as compared to Canada and the United States, countries with excessive environmental restrictions.

B. Background
The evolution of the mining legislation started in the colonial times when mines were considered Royal Property by the Spanish Crown. This tradition was kept until 1909, when President Porfirio Diaz enacted the Mining Law and the government gave owners of concessions perpetual rights to exploit mines. Due to the social turmoil after the Mexican Revolution in 1910, Article 27 of the 1917 Mexican Constitution set forth that, The Nation has the imminent domain over all natural resources in the continental shelf and islands. Therefore, the owner of the land has the right to possess and use what is on and over the land, but does not have the natural domain over it. Legislative changes took place in February 6, 1961 with the enactment of the Regulations to Article 27 of the Constitution on the Exploration and Treatment of Mineral Resources, which nationalized the industry by stipulating a mandatory minimum 51% of national capital on mining companies/corporations. Such regulations forced foreign investors to sell their shares or incorporate themselves as Mexican companies. In 1975, in addition to previous legislative changes, Regulations to Article 27 of the Constitution on Mining Matters further established a high degree of governmental intervention, and excessive procedural requirements and permits. It also kept a 51% mandatory percentage of national capital on mining corporations and further established a 66% mandatory national capital for certain special concessions. On December 1990, the countrys economic climate and the new and liberal political framework resulted in a more transparent definition of the scope of power granted to government authorities and unnecessary obligations and procedures for mining concessions were eliminated. Furthermore, foreign capital was finally authorized to participate in 100% of the stock of mining corporations/companies once they were incorporated as Mexican entities.

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Mining Law in Mexico: An overview

C. Legal

framework

I. Constitution
Article 27 of the Mexican Constitution sets forth that the lands and waters within the national territory originally belong to the Mexican United States (Mexico), which has the right to transfer title thereto to private persons in order to constitute private property. Article 27 also provides that the Nation has direct ownership of mineral deposits within the national territory, which cannot be transferred. The use and exploitation of such national resources by private parties is only permitted pursuant to concessions granted by the Federal Executive Branch, through its corresponding government agencies, pursuant to applicable laws and regulations. Such laws and regulations must be complied with in the exploitation of mineral deposits, as of their effective dates, even with respect to previous mining concessions. The corresponding government agencies may cancel concessions for failure to comply with applicable laws and regulations, as well as for creating national mining reserves. The creation of national mining reserves will be over the ore deposits required to satisfy the nations future needs. Once incorporated into national mining reserves, the ore deposits shall not be subject to mining concessions or allotments, unless such zones are cancelled from the mining reserves through a decree issued by the Federal Executive to enable the Ministry of Economy to declare the zone as free land (as explained herein below) and subject to be granted under a mining concession, or call for a bid to grant one or more mining concessions over such ore deposits.1

II. Mining

Law

The Mining Law (the Law) is a federal statute that governs the grant, use, cancellation and expiration of mining concessions. The Law was originally published in the Federal Official Gazette (FOG) on June 26, 1992. On December 24, 1996, Article 13 A was amended, affecting the section regarding bids, as described hereinafter. On April 28, 2005, the Law was amended on a number of sections, whereby some of the most relevant provisions included the following: 1. 2. change in the name of the Ministry in charge of the application of the Law; the incorporation of the Mexican Geological Service (formerly the Consejo de Recursos Minerales) integrated by a General Director among representatives of other State Ministries, having designated more functions; the change of Article 13 A to Article 13 BIS; more obligations to holders of mining concessions; the existence of a sole mining concession for exploration or exploitation works, instead of the distinction of an exploration concession vs. an exploitation concession; and preference rights on the applications for mining concessions and allotments.

3. 4. 5.

6.

Mining Law, art. 17

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Mining Law in Mexico: An overview

On June 26, 2006 the Ministry of Energy enacted a decree which amended the Mining Law and the Regulatory Law of the Article 27 Constitutional for the Oil Industry, allowing the utilization of coal mine waste gas, also known as coalbed gas. Such decree allows the holders of mining concessions of coal mines to use such gas for self-consumption purposes, or to deliver this gas to PEMEX. The Law controls mining matters pursuant to Article 27 of the Constitution and its provisions are of a public nature which shall be observed throughout Mexico. The Law by its own terms applies to a thorough list of specifically identified minerals and other substances. The Federal Executive is empowered to issue decrees to include additional substances within the scope of the Law. Exploration, exploitation and processing of affected minerals or substances are considered of public benefit and therefore possess preferential status over any other use of the land, subject to the conditions established by the Law. Only through a law of a federal nature contributions taxing these activities can be established.

III. Regulations
The Regulations to the Law were published in the FOG on February 15, 1999, abrogating the former Regulations published in the FOG on March 29, 1993. Their main objective is to provide administrative rules necessary for the compliance with the Law.

IV.

Handbook of Services to the Public in the Area of Mining

The Handbook of Services to the Public in the Area of Mining was published in the FOG on July 28, 1999 to establish administrative procedures and prescribe the forms for the filing and review of matters provided for in the Regulations to the Law. It also sets forth details regarding claims and photographs of claims, and requirements for surveys.

V.

Foreign Investment Law

As mentioned above, the legal framework, including the Foreign Investment Law had eliminated prior restrictions on foreign participation in mining activities (including gold). Before, foreign investors were limited to owning 49% of the shares or other equity interests of a Mexican company engaged in mining,2 whereas now they can participate in 100% of the stock of mining corporations/companies incorporated as Mexican entities.

Regulation to Law to Promote Mexican Investment and to Regulate Foreign Investment (FOG, May 16, 1989)

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Mining Law in Mexico: An overview

D. Administrative

Agencies

The Ministry of Economy has the authority and regulatory powers to enforce compliance with the Law.3

I.

Ministry of Economy (the Ministry) (formerly known as the Ministry of Commerce and Industrial Promotion).

The Ministry is mandated to formulate and direct national mining policy, and promote the use and development of mineral resources. It is responsible for mining registries and recording activities. It also has authority to grant the agreements, concessions, allotments, permits and authorizations established by the federal mining laws and regulations.

II.

General Coordination of Mines

The Ministry exercises its legal authority through the General Coordination of Mines (Coordinacin General de Mineria), a central agency established by the internal regulations of the Ministry. The General Coordination of Mines in turn relies on the General Bureau of Mines (Direccin General de Minas). The primary responsibilities of the General Bureau of Mines are the management and control of concessions, allotments and national mining reserves, according to the applicable rules implementing Article 27 of the Constitution. For such tasks, the General Bureau of Mines relies on the support of various subordinate agencies. The Handbook of Services to the Public in the Area of Mining provides the existence of eight Mining Delegations (Delegaciones), which include one or more states of Mexico, and other Federal Delegations (Delegaciones Federales). The Delegations are also responsible in coordinating and supervising the services rendered by the Mining Subdirections (Subdirecciones de Minera) and Mining Agencies (Agencias Mineras), in which all procedures to obtain concessions must begin. Other procedures such as exercise of rights, compliance of obligations, nullity and suspension of rights, Mining Public Registry and Mining Experts Registry. All the foregoing in connection to mining concessions shall be carried out before the General Bureau of Mines, Federal Delegations or Mining Subdirections, depending on each procedure.

III.

Public Registry of Mining (the Registry)

The main purpose of this entity is to record concessions, allotments, agreements, arrangements and administrative actions that may affect mining rights. Any act or agreement required by law to be registered with the Registry is binding on third parties and on the Ministry only when publicly recorded in the Registry.

Pursuant to Article 34, paragraphs XXVII, XXVIII and XXIX of the Organizational Law of the Federal Public Administration (Ley Orgnica de la Administracin Pblica Federal).

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Mining Law in Mexico: An overview

IV. Mexican

Geological Service

This is a decentralized agency and a separate legal entity coordinated by the Ministry. Under Article 9 of the Law, it is required, among others, inter alia, to identify and quantify potential mineral resources, to inventory national mineral deposits and furnish public geological-mineral information, promote research, identify and promote infrastructure works which foster the development of new mining districts, advise the Ministry regarding concessions and zones to be incorporated into or removed from national mineral reserves, and assist the Ministry in bids for land concessions with cancelled allotments and removed land from mineral reserves.

V.

The National Property Managing and Appraisal Institute (Instituto de Administracin y Avalos de Bienes Nacionales - INDAABIN) (the INDAABIN)

This decentralized agency operates under the Ministry of Public Function (Secretara de la Funcin Pblica formerly known as the Secretara de la Contralora y Desarrollo Administrativo). It may be involved in mining matters when the owner of a concession requests the expropriation, temporary occupation, or creation of easements on certain land necessary to carry out work. The INDAABIN determines the value of the land in order to quantify the indemnification to be provided to the landowner.

VI. Mining

Promotion Trust

This federal agencys basic responsibility is to support the exploration, extraction, processing and marketing of all types of minerals, except hydrocarbons and radioactive materials, by providing technical advice and financial support to existing and new companies. Its main purpose is to substitute current imports and promote exports.

VII.

National Institute of Statistics, Geography and Information (Instituto Nacional de Estadstica, Geografa e Informtica - INEGI).

It compiles, processes, submits and distributes statistical and geographical information generated in the country. It also sets policy on information systems that the federal administration must follow.

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Mining Law in Mexico: An overview

E.

Persons eligible to obtain mining concessions and related property rights

Mining concessions may only be granted to Mexican nationals and companies, ejidos4, agrarian communities and communes, and Indian communities.5 In the case of companies, they must be domiciled in Mexico, and include in their charter and bylaws the exploration or exploitation of minerals and substances subject to the Law.6 Foreign participation in the ownership of such companies must comply with the provisions of the Foreign Investment Law (the FIL), which does not impose any limitations with respect to mining, except on radioactive materials.7 The FIL allows 100% foreign-owned Mexican firms to obtain concessions. The Constitution also provides that only natural-born Mexicans and Mexican companies are entitled to mining concessions, but the government may grant the same to foreigners subject to certain conditions. Foreigners must agree before the Ministry of Foreign Relations to consider themselves as nationals with respect to such concessions, and should not invoke the protection of their governments in relation to such concessions, under the pain of losing the same to the Mexican Government for breach of this agreement.8

Ejido property in Mexico is the land granted by the government to individuals for agricultural and ranching purposes. Ejidos are structured as communities or townships. They have internal administration and surveillance boards, respectively known as the Comisario Ejidal and the Comite de Vigilancia. Ejido property may exist either for the exclusive use of an individual beneficiary (the Ejidatario) in the form of Ejido Parcels, or for the mutual benefit of the Ejido community in the form of Ejido Community Parcels. All Ejido properties are inalienable and not subject to liens or attachments. Only through a lengthy procedure may an Ejido parcel be liberated out of the Ejido property regime and converted into private ownership. In such case, the land will be registered with the Public Registry of Property in the appropriate jurisdiction. Communal property shares virtually all characteristics of the Ejido property, with the exception that there are no exclusive parcels for individual beneficiaries. Instead, all parcels belong to the community for its common use and enjoyment. Similar to the Ejido property, a communal property is inalienable and not subject to liens or attachments. Likewise, it should also be recorded with the Agrarian Registry and Common Property Certificates granted to the members of the Ejido.
5 6 7 8

Mining Law, art. 10 ID., art. 11 (I) and (II) ID., art. 11 (III); FIL, art. 5 (V)

Prior to its most recent amendment, this Constitutional provision limited this right to Mexican companies owned exclusively by Mexican nationals. The elimination of this restriction means that a dulyincorporated Mexican firm owned by foreigners also qualifies. See also the discussion below regarding the Foreign Investment Law.

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Mining Law in Mexico: An overview

Finally, foreign nationals and companies may not, under any circumstances, acquire ownership over land within a band of 100 kilometers along the nations borders and within 50 kilometers of the coast line.9

F.
I.

Scope and types of concession

Land subject to concession.

Concessions are granted over free land, pursuant to the first in time, first right principle, which establishes that the first person to request a concession over a certain portion of land, will have the right to the same, provided all other requirements under the Law and the Regulations are met. Under the Law, free land means any land within the national territory, except for the following:10 1. 2. 3. 4. Zones incorporated into mineral reserves; Land covered by existing concessions and allotments;11 Land covered by pending applications for mining concessions and allotments; Land covered by mining concessions granted through a bidding process and those derived therefrom which have been cancelled; and Land covered by mining lots from which no concessions would be granted due to the cancellation of the bidding process.

5.

II. Types

of concession.

Pursuant to the amendment of the Law of April 28, 2005, there is currently no distinction between the exploration and exploitation of mining concessions. The amendment to the designation of a single type of mining concession (exploration and exploitation) in the Law was conditioned to the publication in the FOG of the amendment to the Federal Fees Law (Ley Federal de Derechos) in connection to fees payable by mining concessions holders, such amendment was published in the FOG last December 21, 2005.

This area is commonly known as the restricted zone or exclusive economic zone. Note that a Mexican company owned 100% by foreigners is not subject to this prohibition, provided the foreign shareholders enter into the above-mentioned agreement with the Ministry of Foreign Relations. See also FIL, article 10, under which such foreign-owned Mexican firms may acquire title to real property in this zone for non-residential activities, and must register such acquisition with the said Ministry. For residential use as hotels, tourist condominiums or other forms of lease, foreign individuals and companies and foreign-owned Mexican firms must obtain a permit from the Ministry of Foreign Relations in order to acquire rights to such real property through a trust established with a Mexican bank. Mining Law, art. 14

10 11

A mining allotment (asignacion) is only granted to the Mexican Geological Service for the exploration of national mineral resources.

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Mining Law in Mexico: An overview

Therefore, the Law currently provides the existence of mining concessions which allow the owner to perform (i) exploration works on the ground with the purpose of identifying mineral deposits and quantifying and evaluating economically usable reserves and accordingly perform work to prepare and develop areas containing mineral deposits, and (ii) exploitation works to detach and extract mineral products from such deposits. Mining concessions have a duration of 50 years from the date of their recording in the Registry. They may be extended for an equal term if: (1) the holder does not cause cancellation of the concession by any act or omission sanctioned by the Mining Law; and (2) the holder requests an extension within five years prior to the expiration date.12 Article 27 of the Constitution also provides that legal rules regarding exploitation of minerals and substances owned by the State apply from their effective dates, regardless of the date of issuance of a concession. Failure to observe such rules is a basis for cancellation of a concession. Also, the Federal Government has the authority to establish and abolish national reserves.

G.
I.

Minerals covered by a concession

Minerals allowed for concession

Mining concessions confer rights with respect to all mineral substances covered and provided by article 4 of the Law; pursuant to the Law, the following are considered minerals or substances that constitute deposits different from those composing the ground when found in veins, mantles, masses or deposits: i. minerals or substances from which the following are extracted: antimony, arsenic, barium, beryl, bismuth, boron, bromine, cadmium, cesium, cobalt, copper, chrome, scandium, tin, strontium, fluorine, phosphorus, gallium, germanium, hafnium, iron, indium, iridium, yttrium, lanthanum, lithium, magnesium, manganese, mercury, molybdenum, niobium, nickel, gold, osmium, palladium, silver, platinum, lead, potassium, rhenium, rhodium, rubidium, ruthenium, selenium, sodium, thallium, tantalum, tellurium, titanium, tungsten, vanadium, zinc, zirconium and iodine; minerals for industrial use: actinolite; alum, alunite, amosite, andalusite, anhydrite, anthophyllite, sulphur, barite, bauxite, biotite, bloedite, boehmite, borate, brucite, carnallite, celestite, cyanite, cordierite, corundum, chrysotile, crocidolite, quartz, dolomite, epsomite, staurolite, phlogopite, phosphate, fluorite, glauberite, graphite, garnet, halite, hydromagnesite, kainite, kieserite, langbeinite, magnesite, mica, mirabilite, muscovite, nitratine, olivines, palygorskite, pyrophyllite, polihalite, sepiolite, sillimanite, sylvite, talc, taquidrite, thenardite, tremolite, trona, vermiculite, vivianite, witherite, wollastonite, gypsum, zeolite and zircon; diatomite; precious gems: beryl (blue var aquamarine), alexandrite, amethyst, amazonite, aventurine quartz, beryl, chrysoberyl, tiger stone, diamond, dioptase, epidote, wererite, emerald, espinel, spodumene, jadeite, kuncita, lapislzuli, azure stone, malachite, morganite, olivine, opal, riebeckita, ruby, sodalite, tanzanite, topaz, tourmaline, vesubianite and sapphire;

ii.

iii. iv.

12

Mining Law, art. 15

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Mining Law in Mexico: An overview

v. vi.

gem salt; products derived from the decomposition of rocks where exploitation is effected primarily by underground works, as all varieties of clay such as kaolin and montmorillonites as well as quartz sands, feldspars and plagioclases; the following minerals or organic materials used as fertilizers: apatite, collophane, phosphorite, phosphosiderite, francolite, variscite, wavellite and guano; all varieties of mineral coal and the gas associated to the deposits thereof; and all other minerals and substances determined by the Federal Executive by a decree which will be published in Mexicos Federal Official Gazette, taking into consideration their industrial use with the development of new technologies, their quotation in international markets or the need to promote the rational exploitation and preservation of nonrenewable resources in favor of society.

vii.

viii. ix.

II.

Minerals excepted for concession

In accordance to article 5 of the Law, the following minerals and substances are excepted from the application of the Law: (i) petroleum and hydrocarbons, solid, liquid or gaseous; except gas associated to deposits of mineral coal, (ii) radioactive minerals, (iii) substances dissolved in underground water, (iv) rocks or products derived from their decomposition which are only subject to use for the fabrication of construction materials; (v) any product derived from the decomposition of rocks, which exploitation is carried out through works on the surface; and (vi) salt coming from a basin that does not reach the ocean.

H.
I.

Rights and obligations of concessionnaires

Rights under concessions.

Mining concessions licenses do not grant rights comparable to a freehold or leasehold, given that they do not confer direct property rights to the parcel of land involved, except for the rights to: (i) carry out works of concessions or exploitation within the mining lot covered by the concession; (ii) dispose of mineral products obtained from such works during the term of the concession; (iii) dispose of the debris within the area covered by the concession, unless it originates in another concession in force; (iv) obtain the expropriation, temporary occupation or establishment of an easement on the lands required to carry out the works of exploration, exploitation and processing, as well as the disposal of debris, rocks, clinker and slag heaps, and to establish underground right of way easements; (v) obtain certain water rights related to the concession for the exploration, exploitation and processing of minerals and substances obtained and for the domestic use of the same for the employees of the mines; (vi) obtain preference on the concessions from the water of the mines for any use different from the foregoing, in accordance with the terms of the applicable law; (vii) transfer title to the concession or assign rights thereunder to persons legally permitted to receive such rights; (viii) segregate or consolidate mining lots; (ix) waive title and

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Mining Law in Mexico: An overview

rights derived from mining concessions; and, (x) obtain the extension of the mining concessions for a subsequent 50-year term.13

II. Obligations

of concessionaires.

The Mining Law imposes the following obligations on concessionaires:14 1. Start operations of the exploration or exploitation 90 days following the date on which the concession is recorded before the Registry, and incur and evidence certain minimum investment or obtain economically useful minerals in the amounts provided under the Regulations.15 Pay mining concession fees; Comply with technical safety and environmental standards;16 Maintain in place permanent fortification works, shoring and other installations necessary for the stability and safety of the mines; Maintain the landmarks in the same place and in good condition; Provide the Ministry with statistic, technical and accounting reports in terms of the Regulations and Law; Allow inspection visits from the Ministry; Provide the Ministry with geological-mining reports when the mining concession is cancelled due to expiration, abandonment, substitution or reduction, sanction or judicial resolution; Provide the Mexican Geological Service, in case of mining concessions granted through a bid process, semi-annual reports of the works carried out and the production obtained from the lot covered by the concession for payment control of the finders fee or other economic fees provided in favor of such organism; and File checking reports before the Ministry every May and shall refer to works carried out from January to December of the preceding year.

2. 3. 4.

5. 6.

7. 8.

9.

10.

13 14 15

Mining Law, art. 19. ID., arts. 27 and 28.

arts. 64 and 65 of the Regulations set forth tables with the mandatory exploration and exploration amounts based on the land area compromising the concession. Concessionnaires shall observe the applicable provisions of the General Law of Ecological Balance and Environment Protection, and the applicable Official Mexican Standards and may and all other applicable environmental and administrative laws.

16

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Mining Law in Mexico: An overview

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I.

Procedure to obtain mining concessions

Mining concessions may be obtained either through a public bid or by an application process filed by the interested party before the relevant mining agency in terms of the Law, Regulations and Handbook of Services to the Public in the Area of Mining. Public bids apply when the government considers it necessary to exploit certain mining reserve areas or as a result of the cancellation of mining allotments granted to the Mexican Geological Services which had carried out prior exploration works. Applications and reports related to mining concessions must be filed using the forms specified in the Handbook of Services to the Public in the Area of Mining. The forms indicate the number of copies and exhibits to be enclosed, as well as the obligation to enclose the receipt for payment of the applicable fees. Regarding the transfer or assignment of concessions or rights thereunder, such transfers may be freely made to any party having legal capacity. The transfer of mining concessions or rights thereunder shall produce legal effects against third parties and the Ministry upon their registration before the Registry.17 Commercial agreements, such as credit agreements or guaranties, may impose liens or create security interests in the rights derived from a concession. These agreements require should be recorded before the Registry to perfect such liens and security interests.18 Generally, a transfer or assignment will be null and void when made to an ineligible person under the Law, (i.e., a company incorporated outside of Mexico). However, the Mining Law provides that a transfer to an ineligible person will not be null and void when it occurs pursuant to a judgment in payment of a debt, and provided further that the rights are transferred to an eligible person within 365 calendar days after they are awarded to the creditor.19 It remains unclear whether under the Law, a foreign party financing a mining operation could take a direct title interest in the rights under the concession. As a right in rem, the grant of such rights may go beyond the limited scope of the above-mentioned exception.

17 18 19

ID, art. 23. ID., art. 46 (VI). ID., art. 41.

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Mining Law in Mexico: An overview

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J.

Real Property related to mining concessions

In case that the party requesting a mining concession does not own, or has legal access and/or use of the subject land, a concession may be requested together with a request for a condemnation, temporary occupation or easement over the land subject for exploration and exploitation.20 The extension of land subject to the temporary occupation or easement derived from a concession shall be allocated considering the essential portions of land required in carrying out the exploration, exploitation and benefit works. The Ministry shall resolve on such request after reviewing technical reports filed by the party requesting the concessions (which shall provide the information and documents required by the Regulations) and hearing the affected landowner, who shall be indemnified according to an official appraisal carried out by the INDAABIN, in accordance with the provisions set forth by the Regulations. In the case of expropriation, when applicable, the Ministry shall submit the corresponding resolution to the Executive Government. The expropriation of land owned by ejidos and communes shall be subject to the provisions of the agrarian legislation.21 The constitution of easements or temporary occupation of land subject to Ejido Regime or Communal Property, as well as the expropriation of such land or its incorporation into private property for the works required and derived from mining concessions, in most cases represents a lengthy procedure. However, in some cases, concessionnaires enter into lease or similar agreements over the land surface required for their operations, or perform specific works at no cost for the benefit of the agrarian community in exchange of the use of the land surface.

Mining Law, art. 6 provides that the exploration, exploitation and processing of the minerals and substances covered by the Law are preferred over any other types of use of land.
21

20

Mining Law., art. 21.

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