Image of 1912 governmental order giving Grupo México’s
Mexicana de Cobre’s mining and metallurgical operations known as La Caridad
permission to generate electricity with no fee from a planned hydroelectric
plant Grupo México is building on the La Angostura dam.
Entrance to the Grupo México’s Buenavista copper mine
in Cananea / Global Media Agencies
Tom Barry
The National Water Commission (Conagua), State Water
Commission (CEA), and Grupo México have been forthcoming about the consumption
and contamination of water in the Yaqui River basin. The federal government’s
environmental agencies have ignored Grupo México’s systemic disregard for the
environmental consequences of their operations. And neither the federal
government nor the state of Sonora have protected the ejidos and towns near its mines from displacement and environmental
contamination, despite a long history of complaints.
Grupo México’s La Caridad mine and metallurgical complex
near Nacozari de Garcia is a tightly guarded enclave. Situated next to La
Angostura – Sonora’s first major dam and reservoir – La Caridad has since the
construction of the dam been its major beneficiary.
Grupo México says that it pays fees to Conagua for its water
consumption at all its operations “with the exception of but that it pumps
water directly from the reservoir – apparently without any fees. As it states
in its annual report, “Mexicana de Cobre (La Caridad) pumps water directly from
the La Angostura, which is near the mine and the processing plants.”[i]
Mexicana de Cobre operates one of the three acueducts that
pumps water from Yaqui River basin.
The pumping station at La Angostura transfers a reported 26
Mm3 of water to the company’s copper and molybdenum mining
operations and processing plants.
Under a 1991 agreement between the Yaquis and Conagua and
CEA (opposed by committees in Vícam and Pótam but signed by eight governors),
the Yaqui-Guaymas aqueduct transfers 22Mm3 of water from the Yaqui
Valley to Guaymas, Empalme, and San Carlos.
The Independencia aqueduct has the capacity to transfer 75Mm3
from the middle Yaqui River basin at the Novillo reservoir to Hermosillo.
The exact amount of water that Grupo México’s Mexicana de
Cobre complex extracts from the river and by its wells within the vast complex
– encompassing 104,990 hectares – is not publicly known. However, the three
aqueducts alone extract 123 Mm3 of water from the Yaqui River basin – which is
about 20% more than the total capacity of La Angostura. When ordering the
construction of La Angostura, President Lázaro Cárdenas decreed in 1940 that
the Yaquis had water rights to half the reservoir’s capacity – but these promised
water rights have never been implemented, which helps explains the vehement
Yaqui opposition to the Novillo-Hermosillo aqueduct.
Nacozari de García is a quintessential mining town. It is
also the closest large town to La Angostura, which lies about 20 miles to the
city’s southeast. Despite its proximity to the reservoir and its role as Grupo
México’s offices for La Caridad, the city has for decades suffered severe water
shortages. While the mine has free access to the reservoir, neither the mine
nor the government has created the infrastructure necessary to supply Nacozari
with water from Angostura.
In contrast, the federal government allows Grupo México to
exploit La Angostura as it pleases.
The federal government’s privileged treatment of Grupo
México continues from sexenio to sexenio, whether PAN or PRI presidents.
A recent example of how the federal government gives Grupo México free rein
exploit the country’s natural resources is the company’s plan to tap into the dam’s
hydroelectric capacities – without regard to environmental impacts, Yaqui water
rights, or impact on other traditional users of Yaqui River water.
In September 2012 the Federal Energy Regulation Commission
granted Grupo México permission to establish a 7.00 MW hydroelectric facility
to generate an estimated 41.00 GWh of electricity to serve the needs of La
Caridad. According to the permit, Grupo México would begin generating
electricity in September 2014.[ii]
There was no fee specified on the grounds that the
electricity would not be for sale but for self-sufficiency (“autobastecimiento”). Furthermore, the
federal commission noted that the “opportune and efficient provision of energy
is one of the pillars that supports national development and constitutes a
necessary condition to attain its goals of growth.” What is more, the use of La
Angostura water would “respond chiefly to the company’s goals to increase the
competitiveness of the production processes of its various businesses.”
Before seeking approval of the federal energy commission, Conagua
on September 29, 2010 had granted Grupo México a water-use permit (“título de concesión”) to “exploit, use,
or take advantage of national surface waters amounting to 416,669,000 cubic
meters of water annually.” Conagua reports that La Angostura has a capacity 864
Mm3 although other Conagua reports note that effective capacity
because of silt accumulation has decreased to 700 Mm3.
The Conagua permit was issued without any environmental
impact study. The permit for Grupo México to use such immense quantities of
water in the upper Yaqui River basin came at the time that the
anti-Novillo-Hermosillo coalition was organizing large demonstrations. The Yaquis
were formulating legal cases against the aqueduct that, among other things,
asserted that SEMNARNAT’s environmental impact statement on the aqueduct was
grossly inadequate since it didn’t take into account the impact on the river
because of reduced flows.
La Caridad copper mine adjacent to La Angostura dam
and reservoir with aqueduct in foreground.
Understandably, the focus of the anti-aqueduct coalition was
on the Conagua-approved and -financed transfer of water from the Yaqui River
basin to Hermosillo in the depleted Sonora River basin. Conagua tried to
assuage the coalition’s concerns that the aqueduct would leave the lower Yaqui
River basin without a dependable supply of water, especially during droughts
with the still-unconfirmed story that it had bought water rights from small
farmers in the middle river basin. What the federal water agency didn’t say –
and still hasn’t acknowledged – that the highly questionable water permits
issued to Grupo México and other mining operations constituted were responsible
for vast withdrawals of water from both the Sonora and Yaqui basins.
Prior to the federal energy commission’s approval of Grupo
México’s permission, the company had also succeeded in securing a favorable
ruling by SEMARNAT, the federal environmental ministry. SEMARNAT determined
that there would be no need for an environmental impact statement for the
hydroelectric plant to be operated by México Generadora de Energía (MGE).
The determination followed SEMARNAT’s practice of narrowing
the scope of the possible environmental impact to the construction of the
hydroelectric plant rather than considering the manifold impacts on water
quality, wildlife, and the riparian environment. SEMARNAT ruled on January 27,
2011that “there would be no need for any presentation of a study of
environmental impact for its authorization.” As the Union of Concerned
Scientists has concluded, hydroelectric plants need to be carefully regulated.
If, for example, the water used for electricity generation includes water from
the lower levels of a reservoir the oxygen level of the released water will be
insufficient to maintain river life.[iii]
Grupo México created MGE in 2005 and received approval by
the Energy Regulatory Commission to generate electricity for the company’s
mining and metallurgical operations in Sonora. Grupo México told its
stockholders that MGE would produce electrical energy to its Mexican open pit
mining operations “at a discount of the cost charged by CFE (Federal
Electricity Commission).” Grupo México boasted that its MGE subsidiary formed
part of the company’s commitment of strengthening its mining division position
as one of the world’s low cost producers.”[iv] Grupo México has not reported if the planned hydroelectric plant is currently operating, although it has installed two gas-turbine generators at La Caridad.
Although not mentioned by Grupo México, free, easy, and
irregular access to water in Mexico is likely one of the reasons that
transnational firm is one of the world’s low cost producers.
Like the “irregular” water permits issued by Conagua to
Grupo México, the federal energy regulatory commission’s authorization was also
irregular. The commission issued its authorization in September 2013 for the
construction of the company’s hydroelectric plant in September 2013 but Grupo
México had been busy constructing the facility since July 2012. In other words, the commission ruled on Grupo
México’s request at mid-point in the construction process, creating the
assumption that Grupo México had been assured of the commission’s approval.
While this process was on the face of it irregular, it is the regular process
of corporate-governmental relations in Mexico.
Until the late 1980s, Grupo México’s Buenavista and La
Caridad mining complexes were government-owned mining corporations. Yet while
the federal government held the title to these massive operations, they were
heavily financed through NAFINSA, the government’s development bank, with most
of the debt held by foreign investors and banks. When the government privatized
La Caridad, the enterprise was heavily indebted – owing $1.36 billion to
foreign banks.[v]
This history as a heavily indebted government enterprise
established a pattern of free access to water and the lack of enforcement of
environmental, land-use, and occupational safety regulations.
Essentially, La Angostura functions as Grupo México’s
private dam and reservoir. Except for one access road to the reservoir for
tourists and fishermen, Grupo México
strictly controls the dam from the west and south.
What is becoming clear that the government and the mining
industry need to be more forthright about water-consumption and
water-contamination by the miniWhile primarily a Mexican concern, the boom in
mining exploration and extraction in Mexico’s northern borderlands – in Baja
California, Sonora, Chihuahua, and Coahuila, especially – has international
repercussions.
The impact of operations of such companies as Grupo México,
Peñoles, and Grupo Frisco don’t stop at the international border but are
putting at risk the quantity and quality of transboundary surface water flows
and groundwater basins that span the border.
[i] Grupo México, Southern Peru Copper,
“Formulario 10-K 2013,” Submitted in Washington, DC., at http://www.southernperu.com/esp/relinv/2013/10K/10k131231e.pdf According to Grupo México: Los derechos por
uso de agua se establecen en la Ley Federal de Derechos, la cual distingue
varias zonas de disponibilidad con diferentes tarifas por unidad de volumen,
dependiendo de cada
zona, con la
excepción de Mexicana de Cobre. Todas nuestras
operaciones
tienen una o varias concesiones de agua y bombean
de pozos el
agua que necesitan.”
[ii] “Resolución por la que la Comisión
Reguladora de Energía ortorga a Mexicana de Cobre, S.S. de C. V., permiso para
generar energía eléctrica bajo la modalidad de autobastecimiento para su
central La Angostura,” Comisión Reguladora de Energía, Núm. RES/379/2013, 19 de
septiembre de 2013.
[iii] Union of Concerned Scientists,
“Environmental Impact of Hydroelectric Plants,” at
http://www.ucsusa.org/clean_energy/our-energy-choices/renewable-energy/environmental-impacts-hydroelectric-power.html#.VHIywVfF8Xc
[iv] Grupo México, press release, n.d., at: http://gmexico.com.mx/files/PRMGGEINICIAVENTAING.pdf
Before it began work on the hydroelectric plant, MGE, which is based on
Grupo México’s property alongside La Angostura, was operating two gas-fired
electricity generating plants at the La Caridad and Buenavista mining
complexes. The Federal Energy Regulatory Commission had approved the creation
of MGE in 2005 for the purpose of operating gas-fired plants, and it wasn’t
until later in the decade that Grupo México came before the commission with the
request for a MGE-run hydroelectric plant.“ S&P Rates MGE,” Reuters, Nov.
16, 2012, 2012.
[v] “Mine Sold in Mexico,” Nov. 4, 1988, New York Times, at
http://www.nytimes.com/1988/11/04/business/mine-sold-in-mexico.html