Insight – Investment continues despite perceptions of uncertainty in Mexico

Perceptions of political uncertainty and community opposition continue to weigh heavily on Mexico’s mining sector. However, in a recent roundtable on mining in Mexico, co-hosted by Austrade and the Australia, New Zealand, Mexico Chamber of Commerce & Industry (ANZMEX), Mexico’s Vice Minister of Mining, Francisco Quiroga, outlined some very positive measures to help make Mexico an even more attractive investment destination for miners.

Vice Minister Quiroga announced sweeping reforms to the current process of issuing mining permits. This includes putting a freeze on new permit applications and digitalising the current list of applications, which would allow the administration to cut through the backlog of permits which have never been used or have expired. These permits make up over 50% of all permits held and have discouraged new applications.

Once freed up, the Mexican Government will be in a position to offer new permits for projects which will actually be available for exploration. A similar moratorium on issuing new leases was recently carried out in Chile with great success.

In another sign that the new administration is opening up investment and reassuring miners about community protests, President Andres Manuel Lopez Obrador has pledged to crack down on corrupt demands from community leaders. This reflects the AMLO Government’s renewed emphasis on community and environment, which is the main driver pushing mining companies to dramatically improve their sustainable mining practices, including community engagement. In return, community leaders have been asked to reciprocate with integrity and transparency.

Investment and new project pipeline

Despite some views on political uncertainty, Mexico still has a healthy pipeline of mining projects that will come online in the next one to five years. It is a testament to the resilience of the Mexican mining sector and its untapped potential (70% of Mexican territory is yet to be explored).

Alongside this robust project pipeline, investment in Mexico’s mining sector is also continuing to grow. For example, CAMIMEX, Mexico’s peak mining body, sees the value of investments rising 7.4% this year to reach US$5.26 billion. In 2018 alone, investment in mining grew 13.8%. CAMIMEX predicts that the total investment in mining in the 2019–2024 period will be US$26.4 billion.

Summary of project pipeline

ProjectCompanyInvestment (US$m)Annual ProductionInitial production
TahuehuetoTelson Resources2016,000oz AuIn production
San Sebastian ExtensionHecla Mining52.25Moz Ag, 15,000oz AuIn production
San FelixMexus Gold-MarMarN/AN/AIn production
Pyrities PlantFresnillo1553.5Moz Ag, 13,000oz Au2020
Centauro extension HerraduraFresnillo11036,000oz Au2022
El CompasEndeavour Silver1011,488oz Au2019
Pyrites Leach plantGoldcorp420120,000oz Au, 5Moz Ag2019
CapelaIndustrias Peñoles30340,000t Zn, 4.7Moz Ag, 7,000t Cu, 8,600t Pb2020
Ciénaga optimizationFresnillo5515,000oz Au, 1.3Moz Ag2019
TerroneraEndeavour Silver693.2Moz Ag, 26,400oz Au2019
PilaresSouthern Copper15935,000t Cu2019
PilaresSouthern Copper15935,000t Cu2019
El PilarSouthern Copper31035,000t Cu2019
fresnillo optimizationFresnillo303.0Moz Ag2019
Ana PaulaAlio Gold137116,000oz Au2020
JuanicipioFresnillo + MAG Silver36010Moz Ag, 30,000oz Au2020
Buenavista Zinc ConcentratorSouthern Copper41380,000t Zn, 20,000t Cu2020
Sonora Bacanora Minerals42035,000t Li2019
Orisyvo Fresnillo350136,000oz Au2021
Herradura expansion, Centauro undergroundFresnillo490145,000oz Au2022
Media LunaTorex Gold482170,000oz Au, 1.7Moz Ag, 21,000t Cu2023
El ArcoSouthern Copper2900245,000t Cu2025
Total7,198849,888oz Au, 34.6Moz Ag, 363,000t Cu, 120,000t Zn, 8,600t Pb, 35,000t Li

Opportunities for Australian METS

These new projects, together with current mining operations, represent significant opportunities for Australian METS companies, particularly those with solutions for sustainable mining (environmental management, community engagement and OHS), as well as technology, equipment and services to boost productivity and lower operational and exploration costs.

The opportunities range across both the productivity and sustainability verticals:

Productivity:

  • Fuel efficiency (LNG, diesel, kerosene)
  • Power consumption efficiency
  • Equipment supply
  • Education and training, including VET
  • Risk management and OHS services
  • Exploration efficiency

Sustainability

  • Water management
  • Community engagement
  • Environmental protection services
  • Mine closure and remediation
  • Cyanide management
  • Tailings management

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