Mexico’s president is in a dispute with a US company over a gravel pit infested with crocodiles. The president is offering $385 million, while the company is demanding $1.9 billion.

Mexico's president is in a dispute with a US company over a gravel pit infested with crocodiles. The president is offering $385 million, while the company is demanding $1.9 billion.

The Battle for Punta Venado: López Obrador’s Vision for the Maya Train

Punta Venado

Background: A Dispute Over Valuable Property

President Andrés Manuel López Obrador has set his sights on a valuable piece of property in Mexico’s Yucatan Peninsula. The 6,000-acre Punta Venado site, located just south of the popular resort town of Playa del Carmen, was previously operated as gravel extraction pits by Alabama-based Vulcan Materials. However, López Obrador’s administration closed them down, sparking a legal battle over the valuation of the property and its future use.

In papers filed for an international arbitration case, Vulcan Materials valued the property at an impressive $1.9 billion. López Obrador, on the other hand, believes his much lower offer, based on a government assessment, is fair. His plans for the property encompass transforming the freight shipping dock into a cruise ship dock, and utilizing the flooded gravel pits as an “ecotourism” area or “swimming pools,” operated by a private operator.

A Strategic Dock and a Controversial Train Project

The dock at Punta Venado holds strategic importance as it is the only significant port facility along that stretch of the Caribbean coast. This makes it crucial for transporting materials, such as gravel and cement, needed for López Obrador’s ambitious train construction project, known as the Maya Train. The train line, stretching 950 miles around the Yucatan Peninsula, aims to connect beach resorts and archaeological sites, bringing tourism income to inland communities.

López Obrador’s vision of turning the Punta Venado dock into a bustling hub for cruise ships and freight transportation is an essential component of his plan. Currently, due to the lack of local supplies of crushed stone required to stabilize the train tracks, López Obrador has had to import the stone, known as ballast, from as far as Cuba. Ships carrying the Cuban ballast have to dock at the port of Sisal, on the Gulf of Mexico side of the peninsula, and have their cargo trucked approximately 180 miles to reach some train construction sites.

The availability of the private freight dock at Punta Venado would greatly streamline the transportation process, allowing for efficient delivery of critical construction materials. However, Vulcan Materials’ ownership of the dock adds a layer of complexity and conflict to López Obrador’s plans.

The battle for control of Punta Venado is not a recent development. López Obrador and Vulcan Materials have been publicly feuding for over a year. In 2021, Mexico’s environment ministry closed Vulcan’s limestone quarry and prohibited the company from exporting stone used in both American and Mexican building projects, alleging that Vulcan had been extracting and exporting rock without proper permits. Vulcan, however, maintains that it had the necessary permits.

Tensions escalated further in March when Mexican police seized the cargo terminal on Vulcan’s property, using it to unload cargo from Cemex, a Mexican cement and aggregates company. The U.S. State Department expressed concerns about the fair treatment of American companies in Mexico in response to the incident. These events have only deepened the rift between López Obrador and Vulcan Materials.

The Threat of Seizure and Uncertainty

López Obrador has left little room for negotiation, vowing to resolve the Punta Venado issue before his term ends in September 2024. He has presented Vulcan Materials with a proposal, expecting them to drop their damages-seeking cases before the arbitration panel as part of the deal. If the offer is not accepted, the president has hinted at the possibility of seizing the property.

The outcome of this dispute holds significant implications for both Vulcan Materials and López Obrador’s Maya Train project. The company stands to lose its valuable property, while the president’s ambitious infrastructure plans could face further obstacles if the Punta Venado dock remains out of his control.

Despite the uncertainty and legal battles surrounding Punta Venado, López Obrador remains determined to push forward with his vision for the Maya Train. While there may be no credible feasibility studies supporting its potential success, the president sees the project as a means to bring economic prosperity to inland communities that have been left behind by the tourism industry centered in Cancun and other coastal areas.

Only time will tell how the battle for Punta Venado will unfold and the results it will yield for both López Obrador and Vulcan Materials. One thing is for certain, the future of the Maya Train project hangs in the balance, with the fate of a controversial dock holding the key to its success.