Fernando Alanís
Director General
Industrias Peñoles
View from the Top

Sustainable Energy for Sustainable Mining

Wed, 02/21/2018 - 17:42

Q: How much of a boost was the Energy Reform for Peñoles?

A: In 1999, we became concerned about the availability and cost of energy in Mexico and given that energy represents around 40 percent of our expenses, we started to look at how we could lower costs. We made a strategic decision to integrate and start generating our own electricity. In 2016, a total of 81 percent of the energy we consumed was generated in-house. Most of this comes from the petcoke thermal plant in San Luis Potosi, which generates 230MW, and the two wind farms in Oaxaca that generate over 40MW. We also have natural gas turbines in Laguna del Rey, Coahuila and a steam generator in Torreon.

In April 2017, we initiated a wind farm project with the Portuguese energy company Energías de Portugal Renovables, in Coahuila. The facility has a capacity of 200MW to cover our energy needs for the zinc refinery expansion in Torreon.

There is a new energy law in Mexico that will require companies to procure at least 30 percent of their energy from sustainable sources by 2025. Peñoles has already reached that landmark.

Q: What must Mexico do to become a more attractive jurisdiction to the global investment community?

A: Mexico has enormous potential. It is estimated that at least 70 percent of the territory has not yet been explored. States including Guerrero and Oaxaca have strong geology but very little mining activity, because there is no efficient policy in place to promote and support the sector. A few years ago, the country had a dream of becoming a global automotive hub. The administration worked toward that goal and now Mexico is the seventh-most prolific car manufacturer in the world.

Q: How much potential is there for lithium mining in Mexico? 

A: There is no big deposit of lithium in Mexico and it is also a complicated metal to mine. There are around 7 million tons of mineable lithium reserves around the world, of which 3 million are in Bolivia, 2 million are in Chile and the rest is spread among other countries not including Mexico.

Q: What is your position on the Ecological Tax imposed in Zacatecas?

A: The mining law is federal, so the measure is unconstitutional, and the federal government has already sent the issue to the supreme court. The issue saddens me, because it suggests that the Zacatecas state government does not recognize the value that the mining offer adds to the region. The industry represents 30 percent of the state GDP and accounts for 13,000 jobs, and many of the companies operating in Zacatecas, including Peñoles, are certified as clean enterprises by PROFEPA. In fact a few years ago, the BMV created a new Sustainable Index and elected Peñoles as one of the 27 companies to be recognized as an environmentally responsible company. In 2017, we were chosen to be part of the new FTSE4GOOD Index on the London Stock Exchange, alongside our subsidiary Fresnillo. Mining has always played a key role in the history of Zacatecas, and we hope that the new government soon recognizes that.

Q: What strategies does Peñoles have to continue to grow and cement its leadership role in the Mexican mining sector?

A: The future of our company is based on three key strategic areas. The first is sustainable development, which incorporates the economic, social and environmental spheres. The second is human capital. We will continue to invest substantially to recruit, develop and retain the most talented workers in Mexico because a company is only as good as its employees. The third is technology. We have an internal R&D group made up of 35 full-time researchers working at a specialized center in Torreon, and we are always looking for innovative methods that can improve our practices. We also work with a total of 26 universities — 24 in Mexico and two in the US — and a mining research group in Australia, so we are fully aware of what is going on in the industry on a global scale and we will never hesitate to invest funds into new technology that can move the mining sector forward.