2023’s Mining Industry Marked by Opportunity, Uncertainty
Home > Mining > Article

2023’s Mining Industry Marked by Opportunity, Uncertainty

Share it!
Fernando Mares By Fernando Mares | Journalist & Industry Analyst - Wed, 02/01/2023 - 12:13

Although Mexico is the home of key mining projects, political uncertainty has affected the performance and profits of mining companies. The outlook has improved somewhat as the government has loosened its stance on mining issues in recent years and new demand for key mining outputs materialized. In this environment, local governments in key mining states like Sonora are working to help facilitate mine developments in 2023.

In 2022, external factors such as high inflation caused by the Russian-Ukrainian war and the global economic slowdown stifled investment. However, political uncertainty remains the main challenge in the Mexican mining sector. Nevertheless, the government relaxed its stance on private company participation in the country. For instance, President López Obrador complained about all the mining companies in the country for years but after the North American Leaders’ Summit, he highlighted that Canadian mining companies are an example of responsible mining: the president said the companies care about the environment, have paid their taxes and create a beneficial social impact. 

In addition, following the reform of the Mining Law that granted the State exclusive control of lithium resources, uncertainty over strategic mineral concessions grew. However, the government's position on the participation of private companies in the lithium industry changed. The president emphasized that he decided to accept private investment, as the development of the new industry requires funding that one party cannot provide on its own.

The COVID-19 pandemic’s disruption in the supply chain, specifically of semiconductors, urged car producers to reduce their reliance on Chinese manufacturers. Now, Mexico is looking to enter this market, which requires key minerals. However, apart from copper, the country is not producing enough of the required graphite, lead, titanium, platinum and lithium, among other resources. “In Sonora, we do not produce minerals like aluminum, which we barely produce in the country. The same goes for cobalt. We must be ready for this new challenge and start looking for opportunities stemming from this new trend in the mining industry,” noted Leonardo Taylor, Director of Mines, the Government of Sonora.

Despite the increased openness to the private sector, some authorities remain unaware of the real workings of the mining industry. This month, Mexico's Minister of Economy, Raquel Buenrostro, and the Minister of Environment and Natural Resources, María Luisa Albores González, proposed changing mining legislation to reduce the environmental impact of mining concessions, protect natural areas, prohibit open-pit mining and guarantee the good treatment of communities.

The mining sector is convinced that it is important to foster its management of environmental and social issues, Nevertheless, it also says some bureaucratic processes could be simplified as some of them are doubled. “This is an exclusive issue for the mining sector. While working on regulatory improvement in Sonora, we found that the most common issue is the duplication of permits. SEMARTNAT and PROFEPA for instance, have more than 27 permits that can be streamlined,” said Taylor. 

According to Taylor, the government must work on defining a clear set of rules for the mining sector because the rule of law can be excessively restrictive. “We also noticed that when a community complains about a mining project, it leads to a law that ends up restricting mine developments. For example, Indigenous consultations that do not properly determine what an Indigenous consultation is or who can be considered to be Indigenous,” Taylor added.

Another challenge for the mining industry in 2023 is the lack of new projects. According to Taylor, there are over 822 projects on stand-by, which represents 68% of the projects in Mexico. This has also impacted exploration investment. While less investment in exploration is a global trend, Mexico has been experiencing drops in this area for over nine years. 

This situation makes it more critical to restart projects on hold, an issue the Sonoran government is tackling. “In Sonora, over 67 of the mining concessions are unproductive because some concession holders do not develop projects and prefer to use them to speculate. Our task now is to recover these concessions and grant them to companies interested in advancing projects,” Taylor said. 

The Ministry of Economy met with local economy ministries to work on a program to identify opportunities and challenges for the mining industry. The efforts will be focused on five industrial sectors: semiconductors, electricity and electronics, agroindustry, medical and pharmaceutical devices and the automotive sector, especially electromobility. The project will lead to the formation of a two-year work plan, diagnose the industrial profile of every state and as simplify as well as standardize formalities. “We realized that if do not identify where to develop industries and simplify bureaucracy, any project will be difficult to be developed. There is much work to do, but we are working on it,” Taylor said.
 

You May Like

Most popular

Newsletter