5.8 Percent of 1Q22’s US$19.42 million FDI Comes From Mining

The Ministry of Economy informed that Mexico attracted US$19.42 million of Foreign Direct Investment (FDI) during 1Q22. Mining continues to play a significant role in this figure, though experts warn that this figure could drop significantly due to regulatory uncertainty.

According to the ministry, the number may be adjusted in the following weeks once there is more information available. Recently, Mexico significantly ramped up the FDI it attracted as a result of the merger of Televisa with Univisión and the restructuring of Aeroméxico, which represent US$6.87 million.

Even without considering these significant factors, FDI reached US$12.55 million, representing a 5.8 percent increase in respect to the same period last year when FDI stood at US$11.86 million.

The preliminary FDI came from 1,807 associations involving foreign capital, 1,306 trust contracts and 15 investments by foreign individuals.

Divided by sector, the Ministry of Economy reported that 24.2 percent of FDI went to the manufacturing industry, 19.4 percent to mass media, 17.2 percent to finance and insurance services, 15.3 percent to transportation, 7.3 percent to construction and 5.8 percent to mining. Various other sectors attracted 10.8 percent of FDI.

Examining FDI by country of origin, the US accounted for 39.1 percent, Spain 10.8 percent, Canada 7.1 percent, France 3.4 percent, Argentina 3.2 percent and the UK 3.0 percent. Many other countries contributed the remaining 33.4 percent.  By type of investment reinvestment of utilities accounted for 47.7 percent, 45.2 percent involved new investments and 7.1 percent came from exchanges between companies. 

“The reported amounts only consider the investments done and formally notified before the National Registry of Foreign Investments of the Ministry of Economy,” said the Ministry of Economy.

Nonetheless, investments in the mining sector are forecasted to fall sharply in 2022, mainly due to the government's ongoing efforts to implement unfavorable reforms, said the Director General of the Mexican Mining Chamber (CAMIMEX), Karen Flores.

The energy reform and the Mining Law's reform have generated great uncertainty for companies and investors in Mexico. As such, the number of additional investments is expected to decrease, warned CAMIMEX. This year, on the back of the approval of the Mining Law’s reform, Mexico is expected to lose around US$24.2 billion in investment, cautioned the National Confederation of Industrial Chambers (CONCAMIN).

In 2021, the sector attracted US$4.24 billion, higher than what was collected in 2020 but 15.6 percent below what was expected, which was US$5.03 billion. In addition, Jaime Gutiérrez Núñez, President of CAMIMEX said that the lack of concessions and permits is impacting the arrival of new investments and even driving away certain companies with projects in Mexico. Gutiérrez stressed that only 30 percent of the territory has been explored, meaning Mexico’s mining potential is tremendous. However, these challenges are causing the country to miss out on opportunities valued around US$25 billion.