The prolific Juanicipio mining project, owned for 56 percent by gold and silver giant Fresnillo and 44 percent by MAG Silver in a joint venture (JV), has been delayed for six months as state-owned electric utility CFE could not tie the project into the grid on time. The state company, in charge of the nationally interconnected grid, cited staff shortages exacerbated by the ongoing COVID-19 pandemic as the reason for the delay.
“The Juanicipio Project team delivered the Project for plant commissioning on schedule despite the recent changes to labour contracting legislation and having successfully mitigated most COVID-19 related issues over the past two years, a testament to the dedication of the operational and development teams on the ground,” Fresnillo and MAG said in a joint statement.
“However, CFE, the state-owned electrical company, has just notified Fresnillo, the Juanicipio Project operator, that approval to complete the tie-in to the national power grid cannot yet be granted and the mill commissioning timeline will therefore be extended by approximately six months. This is directly related to knock-on effects of the pandemic on CFE’s operations, predominantly related to a lack of staff which limits its ability to oversee three key tasks to: review the existing installation, supervise physical connection to the active power grid and approve required blackout prevention devices,” the statement reads.
Though CFE has not directly responded to this issue, the utility has acknowledged that it has been hit by the pandemic, pointing toward the effects the liberation of the Mexican energy market has had since 2014. “It has been a difficult year, not only because of the pandemic. We have lived through three years of dangers while fighting against the Energy Reform, effectively designed to eliminate CFE. But by following the president’s mandate to rescue [the state utility], we took measures to unify its subsidiaries and affiliates,” said CFE’s General Director, Manuel Bartlett, earlier in December. Mexico’s president, Andrés Manuel López Obrador, is championing a constitutional energy reform to boost CFE’s position in the market, though this would come at the expense of private participation.
“As operator, Fresnillo will continue to engage closely with the CFE and [grid operator] CENACE to do all that it can to expedite these necessary approvals,” the miners continued, adding that the interconnection remains uncertain but that a full commissioning of Juanicipio can be expected around the first week of May 2022.