2023 Sees 69% Spike in Suspended Mining Projects

Amid a challenging political and regulatory environment, there has been a 69% increase in the number of suspended projects during the López Obrador administration.

The mining sector has experienced a series of obstacles set by the current administration. According to El Financiero, the number of suspended projects stood at 439 in 2018, while the current figure is 837, representing a 69% increase in halted projects. 

Industry insiders consider the Mining Law Reform a threat to the stability of the industry as it labels exploration a state-exclusive activity, impacting mostly junior companies. The sector is worried that the US$77.2 million budget assigned to SGM for 2024 is 95.47% below the US$1.7 billion private companies invested just in exploration. "With this lack of budget for exploration, they are condemning the country and the mining sector, because mining will be halted for another six years. If the modifications to the Mining Law remain as they are, we will witness Mexico's mining sector entering a clear decline," said Alfredo Phillips, Vice President, Argonaut Gold, in an interview with El Financiero. 

In an interview with MBN, Ramón Luna, Director General, SPM, acknowledged that SGM has talented geologists and manages the most comprehensive database in Mexico. However, the public body does not match the infrastructure of a private company. “(The reform) would either force the more than 100 exploration companies in the country to work with the SGM or make the latter the only operator. This is not feasible because it lacks the necessary infrastructure,” he added. 

Luna highlighted the importance of exploration, since mining projects have a limited lifespan, making it crucial to continuously explore mining districts. “Only 2% of exploration projects become profitable so, if a mine is in operation, there must be 50 exploration projects underway so one of them can replace that operating mine in a few years,” Luna noted. 

Similarly, Raúl García, President, CIMMGM, said that we could see the first impacts of lacking exploration by 2025 and a drop in production within the next five years, if SGM does not maintain the current levels of exploration. 

According to data from SE, in 1Q23, the total FDI in the mining sector amounted to US$419 million. In contrast, during the same period in 2013, this figure reached US$2.036 billion, reflecting a decline of 79.4%. During Enrique Peña Nieto's initial five-year term, from 2012 to 2017, the country received mining FDI totaling US$2.8 billion and US$1.9 billion, respectively, representing a decrease of 32.1%. Meanwhile, during the first five years of López Obrador's administration, covering the period from 2018 to 2023, FDI amounted to US$1.9 billion and US$419 million, marking a significant 78% decrease. However, it is important to note that data for 2023 is not fully available, which means that the percentages provided could vary.

Amid a challenging political and regulatory environment, there has been a 69% increase in the number of suspended projects during the López Obrador administration.

The mining sector has experienced a series of obstacles set by the current administration. According to El Financiero, the number of suspended projects stood at 439 in 2018, while the current figure is 837, representing a 69% increase in halted projects. 

Industry insiders consider the Mining Law Reform a threat to the stability of the industry as it labels exploration a state-exclusive activity, impacting mostly junior companies. The sector is worried that the US$77.2 million budget assigned to SGM for 2024 is 95.47% below the US$1.7 billion private companies invested just in exploration. "With this lack of budget for exploration, they are condemning the country and the mining sector, because mining will be halted for another six years. If the modifications to the Mining Law remain as they are, we will witness Mexico's mining sector entering a clear decline," said Alfredo Phillips, Vice President, Argonaut Gold, in an interview with El Financiero. 

In an interview with MBN, Ramón Luna, Director General, SPM, acknowledged that SGM has talented geologists and manages the most comprehensive database in Mexico. However, the public body does not match the infrastructure of a private company. “(The reform) would either force the more than 100 exploration companies in the country to work with the SGM or make the latter the only operator. This is not feasible because it lacks the necessary infrastructure,” he added. 

Luna highlighted the importance of exploration, since mining projects have a limited lifespan, making it crucial to continuously explore mining districts. “Only 2% of exploration projects become profitable so, if a mine is in operation, there must be 50 exploration projects underway so one of them can replace that operating mine in a few years,” Luna noted. 

Similarly, Raúl García, President, CIMMGM, said that we could see the first impacts of lacking exploration by 2025 and a drop in production within the next five years, if SGM does not maintain the current levels of exploration. 

According to data from SE, in 1Q23, the total FDI in the mining sector amounted to US$419 million. In contrast, during the same period in 2013, this figure reached US$2.036 billion, reflecting a decline of 79.4%. During Enrique Peña Nieto's initial five-year term, from 2012 to 2017, the country received mining FDI totaling US$2.8 billion and US$1.9 billion, respectively, representing a decrease of 32.1%. Meanwhile, during the first five years of López Obrador's administration, covering the period from 2018 to 2023, FDI amounted to US$1.9 billion and US$419 million, marking a significant 78% decrease. However, it is important to note that data for 2023 is not fully available, which means that the percentages provided could vary.