USMCA at Risk in Vulcan Mining Dispute Ruling

Mexico City — The International Centre for Settlement of Investment Disputes (CIADI) of the World Bank is preparing to issue a ruling on the case involving the American company Vulcan Materials, a decision that sources within the Mexican Secretary of Foreign Relations warn could set an uncomfortable precedent for the Mexican government ahead of the renegotiation of the United States-Mexico-Canada Agreement (USMCA).

According to diplomatic sources, timelines for reaching an agreement with Vulcan Materials have shortened. During his most recent conversation with US Secretary of State Marco Rubio, Mexican Foreign Secretary Juan Ramón De la Fuente understood that a CIADI resolution would be imminent.

The Origins of the Vulcan Dispute

The claim by Vulcan Materials, a company with significant lobbying influence within the Republican Party, began in 2018 and is governed by the USMCA's dispute resolution rules. The case was triggered during the administration of President Andrés Manuel López Obrador when the company was suspended from operating a 53,000-hectare mine in the Caribbean due to alleged environmental irregularities.

The former president had promised to resolve the issue before leaving office, apparently with a compensation package for Vulcan, but that agreement was never finalized. The responsibility for the litigation subsequently fell to the Ministry of Environment and Natural Resources (Semarnat), led by Alicia Bárcena, though no major progress was recorded. This lack of progress is cited internally within the cabinet as one of the reasons for a potential departure of Bárcena from her post.

A Complex Negotiation

The Mexican government's latest effort has consisted of proposing a low-impact tourism development project from which Vulcan could receive profits. This negotiation is reportedly in a complex phase due to issues related to the project's development and the role that various Mexican businesspeople, some close to López Obrador, would play in it.

The problem with a potential ruling against Mexico in an international tribunal is that it would lend strength to an idea already circulating among business chambers in Washington: that the new USMCA should establish CIADI as the forum for resolving conflicts for US-capital companies operating in Mexico. This push stems from the perception that the Mexican justice system is no longer reliable following López Obrador's judicial reform.

A Broader Bilateral Context

The Vulcan case now joins a series of other tensions in the bilateral relationship, including tariffs, security, water sharing along the northern border, the containment of Chinese businesses in Mexico, and the ongoing issues surrounding the Felipe Ángeles International Airport (AIFA).