Materials
Outgoing Mexican President Bans Material Extraction at Seized Vulcan Site
The disputed 6,000-acre site includes a limestone quarry and port on Mexico's coast near Playa del Carmen.
Image courtesy of International Center for Settlement of Investment Disputes
With just days of his term in office remaining, Mexican President Andres Manuel Lopez Obrador added another complication into the ongoing dispute over Vulcan Materials Co.’s limestone quarry and port near Playa del Carmen when he declared an area including the site to be a protected natural area.
The Sept. 23 declaration covers more than 200 sq miles in Quintana Roo and specifically prohibits activity including extraction of construction materials. While speaking to reporters, Lopez Obrador called the extraction of gravel from the area an ecological disaster.
“There is no way we are going to allow them to destroy our territory,” he said in Spanish.
A Vulcan Materials representative said via email that the move violates Mexico’s commitments under North American trade agreements including the United States-Mexico-Canada Agreement (USMCA) that took effect in 2020.
“This unlawful measure will have a chilling and long-term effect on U.S.-Mexico trade and investment relations,” the Birmingham, Ala.-based company said in a statement. “This action robs us of our land use and we intend to defend ourselves using all available legal avenues.”
Map courtesy Official Journal of the Federation of Mexico
Vulcan subsidiary SAC TUN, which operated the 6,000-acre facility, said in a statement earlier this year that it always acted in accordance with Mexican law and that it went beyond legal requirements to minimize its environmental impact. It alleged Lopez Obrador’s government wants the site for tourism purposes.
Mexican police and soldiers seized the facility in March 2023 amid a dispute between Vulcan and Mexican cement supplier CEMEX over use of the port. Vulcan said at the time that a lease permitting CEMEX to use the port had expired, and not been renewed.
Vulcan filed an arbitration case with the World Bank International Center for Settlement of Investment Disputes over the seizure, and the case has been slowly playing out. Earlier this month, the tribunal weighing the case decided on the admissibility of new evidence. While Vulcan CEO J. Thomas Hill said last year that he expected a resolution in 2024, it is not clear how soon the arbitration will be decided. The company did not share an updated expectation when asked by a reporter.
Following the seizure, Lopez Obrador said Mexico offered Vulcan about $383 million for the property, though the company valued the property at $1.9 billion and did not accept the offer.
