Two events in the nineteenth century were to decisively shape Muskiz’s history: the Carlist Wars, which led to administrative and legal changes; and the mining boom which utterly transformed the appearance of the area. Following the Liberal victory in the First Carlist War a number of legislative reforms were introduced which affected the way the valley of Somorrostro was administered. In 1841 the “Municipal Authorities of the Kingdom” act was passed, leading to the creation of new municipal authorities to replace the former concejos of the valley. One of these was San Julián de Musques. Political instability throughout Spain triggered further war from 1873. Muskiz and Abanto, which both sides saw as being vital to the control of Bilbao, were the scene of major battles, with Carlist and Liberal forces clashing three times in what have become known as the battles of Somorrostro. The civilian population also suffered the ravages of war, including the shelling of San Juan. The Somorrostro Proclamation (13 March 1876) advocated the new constitutional unity of Spain (further cemented in the Constitution of June that year) and the abolition of Basque local government ("foralismo").

The presence of iron ore in local hills played a decisive role in the town's historical development. Although ironworking had been important since the Middle Ages, the second half of the nineteenth century marked a watershed in Muskiz's history. Until the mid-nineteenth century, the mines were commonly owned, and people from the liberty were free to mine ore wherever and whenever they wished, provided they did not harm third parties. The result of this legal position was a proliferation of mine works, which were abandoned as soon as they ran into the first difficulties. Because of their geographical proximity and their privileges most of the iron was mined by people from the seven councils of Somorrostro.

However, with the abolition of the liberties, allowing mining and exportation of the raw iron, and new technical advances, intense exploitation of the mines began. Geographical location was also a factor, with easy access to sea transport. Local and foreign capital flowed in as investors sought quick profits. The first mine in the town was registered in 1859, with four more following from 1868. After Bilbao, Muskiz had the largest number of foreign mine owners (Alfred Edwards, Triano Iron Ore, MacLennan, etc.,). With the change in legislation and the appropriation of the mines, Muskiz was transformed, with the construction of railways, embankments, ore washeries and overhead cars… all intended to facilitate transport of the ore.

As the mining intensified, especially from the end of the Carlist Wars, the area began to witness large-scale immigration. An uncontrolled population explosion, the lack of the most basic infrastructures, appalling hygienic conditions and unfair working conditions created social discontent which was channelled and organised through workers' organisations and political parties.