State policies may discourage Mexico mining investment

Significance

The government claims the mining firm and its Mexican subsidiary, Primero Empresa Minera, owe around MXN11bn (USD534mn) in taxes; First Majestic claims the government is violating the terms of its Advance Pricing Agreement and failing to follow procedures established in double taxation treaties.

Impacts

• The economy minister has voiced support for mining, but is unlikely to contradict AMLO’s stance in such a high-profile case.
• The government accuses the firm of using the US-Mexico-Canada Agreement to avoid its tax obligations, but will not seek amendments.
• Some congress members have called for lithium industry nationalisation, but nationalisation of other areas of the sector remains unlikely.