By Kylie Madry

MEXICO CITY, (Reuters) – A major river will build a new Constellation Brands (NYSE) brewery that was diverted from the Gulf state of Veracruz, Mexico, after a dispute about water usage, a government official stated Friday.

This plant forms part of a planned U.S. investment of $5.5 billion in Mexico by the U.S. wine, spirit and beer producer through 2026.

According to Jesus Ramirez, the presidential spokesperson for Constellation, the plant will be built by Constellation in central Veracruz.

“A government is open to both foreign and private investment. As long as they comply with Mexican laws and the environment, foreign investors are welcome.

Constellation has not yet decided on the site and budget to build its plant. Its brands include Corona beer as well as Robert Mondavi wines.

Constellation announced this week that it will build the Veracruz plant. It stopped building its large-scale brewery in Mexicali, a deserted city near the border with Mexico in 2020 because of a dispute about water access.

The brewery was said to have cost several hundred million dollars and threaten the water supply of residents in the region. Residents rejected it during a referendum sponsored by President Andres Manual Lopez Obrador.

Business groups were shocked by the referendum results. Lopez Obrador won the agreement to transport the plant to Mexico’s less developed south.

Constellation announced Thursday that it will invest between $5.0 and $5.5 billion over the fiscal years 2023-2026 in Veracruz brewery, as well as two additional plants in Mexico.

Constellation has denied reports by media that Mexico compensated the company for its losses in Mexicali, which had been initially planned as an investment amounting to $1.5 billion.

Mayagoitia explained that they are currently in discussions and hoping for (money) recovery, although there are no guarantees.