Mexico President Reveals $385 Million Plan To End Dispute with US Company

Mexico President Andres Manuel Lopez Obrador announced on Thursday that he has proposed buying a property on the Caribbean coast for approximately $385 million from Alabama-based company Vulcan Materials, AP reports.

The property, which spans almost 6,000 acres (2,400 hectares) and is situated just south of the popular resort town of Playa del Carmen on the Yucatan peninsula, was the subject of a longstanding dispute between the company and the Mexican government.

Vulcan Materials had operated gravel extraction pits at the site, but the pits were closed by López Obrador's administration, leading to the dispute.

In papers filed for an international arbitration case, the company valued the property at $1.9 billion, significantly higher than the president's offer.

The Mexican government's lower offer is based on a government assessment, and López Obrador believes it to be fair.

He highlighted the freight shipping dock on the property as the most attractive feature, which he plans to convert into a dock for cruise ships.

Vulcan Materials has not yet received the formal offer from the Mexican president or responded to the proposal.

The Property Could Be Useful to Mexico

The dock on the Caribbean coast property holds significant value for Mexican President Andres Manuel Lopez Obrador, as it could serve multiple purposes, per the Independent.

Apart from being used as a dock for cruise ships, the facility would also be crucial for transporting gravel and cement for the president's ambitious infrastructure project, the Maya Train.

Additionally, López Obrador has plans to utilize the flooded gravel pits, created by the company Vulcan Materials during their operations, as "swimming pools" or an "ecotourism" area under the management of a private operator.

However, it is important to note that these pits are currently inhabited by crocodiles, which are protected species in Mexico.

While the president has offered to buy the property, he has left open the possibility of resorting to other measures if the offer is not accepted by the time he leaves office in September 2024.

"Before I leave (office), this is going to be resolved, one way or another," he said.

As part of the resolution, the Mexico president has stated that the company, Vulcan Materials, must agree to drop its damages-seeking cases before the international arbitration panel.

Mexico vs. Vulcan Materials

The dispute between Mexico's government and Vulcan Materials has a history that dates to 2021.

Mexico's environment ministry closed Vulcan's limestone quarry in that year and prohibited the company from exporting stone that had been used in both US and Mexican building projects, according to Washington Post.

The Mexican president accused Vulcan of extracting and exporting rock without the necessary permits, while the company maintained that it had the required permits.

The tension escalated further when the cargo terminal on Vulcan's property was seized by Mexican police in March.

The US State Department expressed concerns about the treatment of American companies in Mexico in response to this incident.

The police used the terminal to unload cargo from the Mexican company Cemex, leading to a contentious situation with Vulcan.

The dock at Punta Venado, owned by Vulcan, has become a focal point of the dispute.

Its potential use in transporting cement, crushed stone, and other materials is crucial for the completion of the Maya Train project.

As no local supplies of crushed stone are needed for stabilizing the train tracks, the president has been forced to import the stone, known as ballast, from Cuba.

The lack of an alternative private freight dock on the Caribbean side that can handle such shipments has further complicated the situation.

This article is owned by Latin Post.

Written by: Bert Hoover

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