President López Obrador’s actions have drawn criticism from international investors and U.S. business interests after Mexico’s expropriation of a U.S.-owned port in its final week. The move prevents Vulcan Materials Company, based in Alabama, from extracting limestone at a site it has been developing for decades. Shares in the company fell 1.2 percent to $249.46 on Tuesday morning following the news.
Vulcan has stated that the expropriation is illegal and will add to an ongoing arbitration case. The company had previously sought the Biden administration’s intervention against what it saw as a threat of government takeover, citing a $360 million valuation as deeply undervaluing its assets.
This week’s action marks another move by President López Obrador against business interests, with a new congress recently approved a judicial overhaul that has drawn criticism from international investors. The U.S. Ambassador to Mexico, Ken Salazar, has warned that companies may lose confidence in Mexico as an investment destination due to the changes made to the country’s judicial system.
The issue is also relevant as President-elect Claudia Sheinbaum takes office on October 1st and a bipartisan group of U.S. senators proposed legislation to pressure AMLO to back down from the expropriation plan. The dispute highlights ongoing tensions between Mexico and the United States over trade agreements, investment relations, and environmental concerns.
It’s worth noting that this is not an isolated incident, as Vulcan Materials Company has been in litigation with Mexico since 2018 under the North American Free Trade Agreement (NAFTA). The company had previously defended its environmental record, citing international awards and reforestation efforts.
Explanation:
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Source: Financial Post
