ESG

First Majestic initiates arbitration over tax dispute in Mexico

Silver miner says court proceedings unresolved due to COVID-19

Staff reporter
 San Dimas is one of First Majestic Silver’s three mines in Mexico

San Dimas is one of First Majestic Silver’s three mines in Mexico

It said Mexico's tax authority, Servicio de Administracion Tributaria, had "exhibited a total disregard for the applicable provisions of three separate double taxation treaties" and had unlawfully opted to ignore an advanced pricing agreement, governing the tax on silver sales between 2010-2014 by its subsidiary Primero Empresa Minera.

The silver miner said its efforts to resolve the dispute had been met with "intimidation tactics" and its efforts to challenge these in Mexico's legal system had been stymied by the COVID-19 pandemic.

"The company has regretfully had to take this step of providing a Notice of Intent to Submit a Claim to Mexico so as to prevent further harm to the company, its investments in Mexico, and to protect the health and welfare of its workforce," First Majestic said.

It said Mexico's government now had 90 days to enter good faith negotiations to resolve the dispute.

The company said it had invested more than US$2 billion in Mexico since 2003 and employed about 4,700 people directly in the country.

It produced 6.2 million ounces silver-equivalent from its three mines in Mexico in the March quarter but withdrew its 2020 production and cost guidance in April, due to the country's temporary suspension of mining operations as a COVID-19 prevention measure.

First Majestic was planning to release its financial results today.

Its share price has ranged from C$5.31-$16.50 over the past year and closed down about 3% yesterday to $10.79 to capitalise it at $2.26 billion (US$1.6 billion).

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Journal Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Journal Intelligence team.

editions

ESG Mining Company Index: Benchmarking the Future of Sustainable Mining

The ESG Mining Company Index report provides an in-depth evaluation of ESG performance of 61 of the world's largest mining companies. Using a robust framework, it assesses each company across 9 meticulously weighted indicators within 6 essential pillars.

editions

Mining Journal Intelligence Global Leadership Report 2024: Net Zero

Gain insights into decarbonisation trends and strategies from interviews with 20+ top mining executives and experts plus an industrywide survey.

editions

Mining Journal Intelligence Project Pipeline Handbook 2024

View our 50 top mining projects, handpicked using a unique, objective selection process from a database of 450+ global assets.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.