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

Project Company Investment (US$m) Annual Production Initial production
Tahuehueto Telson Resources 20 16,000oz Au In production
San Sebastian Extension Hecla Mining 5 2.25Moz Ag, 15,000oz Au In production
San Felix Mexus Gold-MarMar N/A N/A In production
Pyrities Plant Fresnillo 155 3.5Moz Ag, 13,000oz Au 2020
Centauro extension Herradura Fresnillo 110 36,000oz Au 2022
El Compas Endeavour Silver 10 11,488oz Au 2019
Pyrites Leach plant Goldcorp 420 120,000oz Au, 5Moz Ag 2019
Capela Industrias Peñoles 303 40,000t Zn, 4.7Moz Ag, 7,000t Cu, 8,600t Pb 2020
Ciénaga optimization Fresnillo 55 15,000oz Au, 1.3Moz Ag 2019
Terronera Endeavour Silver 69 3.2Moz Ag, 26,400oz Au 2019
Pilares Southern Copper 159 35,000t Cu 2019
Pilares Southern Copper 159 35,000t Cu 2019
El Pilar Southern Copper 310 35,000t Cu 2019
fresnillo optimization Fresnillo 30 3.0Moz Ag 2019
Ana Paula Alio Gold 137 116,000oz Au 2020
Juanicipio Fresnillo + MAG Silver 360 10Moz Ag, 30,000oz Au 2020
Buenavista Zinc Concentrator Southern Copper 413 80,000t Zn, 20,000t Cu 2020
Sonora Bacanora Minerals 420 35,000t Li 2019
Orisyvo Fresnillo 350 136,000oz Au 2021
Herradura expansion, Centauro underground Fresnillo 490 145,000oz Au 2022
Media Luna Torex Gold 482 170,000oz Au, 1.7Moz Ag, 21,000t Cu 2023
El Arco Southern Copper 2900 245,000t Cu 2025
Total 7,198 849,888oz 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