Karina Rodriguez Matus
Rodriguez Matus and Feregrino
Expert Contributor

Breaking Myths the First Step in a Thousand-Mile March

By Karina Rodríguez Matus | Fri, 11/06/2020 - 09:18

Mining as an activity is as old as the history of our country. An important part of the political conformation of current Mexico had its origin in mining activities. Cities such as Guadalajara, Chihuahua, Guanajuato, Pachuca, Durango, Zacatecas and San Luis Potosi were founded precisely around mining activities that developed in such areas. The mining wealth found in the national territory has allowed Mexico to rank as one of the main producers of more than 10 metals and minerals, including silver, gold, lead, zinc, salt, copper, manganese, fluorite, bismuth, cadmium, graphite, molybdenum and barite. In particular, Mexico has been ranked in the Top 2 for silver production worldwide for many years.

Therefore, Mexico is undeniably a mining country with significant long-term development potential. It is believed that 70 percent of national territory may contain mineral deposits yet to be explored. However, in recent years, mining activities have been subject to constant attacks and criticism from various groups, giving rise to a number of myths that have permeated the general public and sometimes even the definition of national public policy.

From our point of view, among the mining myths that have most generated discussion, leading to the definition of criteria or positions in various areas and the reality in connection therewith, the following stand out:

Myth: Most of Mexico’s territory is under concession. In fact, according to information from the General Mining Office, there are 24,066 concession titles in effect, covering 16.83 million hectares, equivalent to only 8.59 percent of the national territory, considering that it has a total area of 196.018 million hectares. In addition, of the 8.59 percent only 2.06 percent is currently productive, or about 4 million hectares. From those 4 million hectares, only approximately 200,000 hectares, that is 0.10 percent of the national territory, is occupied by mining facilities, sites or infrastructure.

Myth: Mining activities do not pay taxes. In reality, mining is one of the sectors that pays the most taxes. It is estimated that the tax burden of mining activities nationally is more than 50 percent of their income. According to data from Mexico’s Mining Chamber, from 2016 to 2019, the mining sector paid more than MX$104 billion in income tax only and over MX$26 million in mining duties.

Myth: Mining is a dangerous and unhealthy activity. Actually, the accident rate is below the national average, according to data from the Mexican Social Security Institute (IMSS).

Myth: Mining pays low wages. In reality, mining work is well-paid compared to other industries. Mining workers’ wages on average are 39 percent higher than the national average. As a profession, mine engineering is the fourth-highest paid career nationally, according to data from the Ministry of Labor and Social Welfare.

Myth: Mining investments are short term. This is totally false and ignores the reality of mining activities. Mining investments are businesses with long-term maturity periods and high capital risks. In fact, it is estimated that out of every 1,000 mining prospects to be explored, 100 are subject to detailed exploration and only one actually becomes a mine and that it can take anywhere from 5 to 20 years from the start of exploration of a project, if successful, to its start-up.

Myth: Mining only leaves ghost towns. In reality, as mentioned above, in the history of our country, mining gave rise to cities such as Pachuca, Guanajuato, Zacatecas, San Luis Potosi, Durango, Chihuahua, Taxco and Parral, which could not, for any reason, be considered ghost towns. Curiously, many small towns that did not achieve independent economic development when the mines were depleted now live off tourism, from the magic they had when they were mining villages. In fact, seven out of 10 of each of the towns listed as Pueblos Mágicos (magic villages) were mining towns.

These and other myths that have emerged around mining start from a great unawareness of the reality and evolution of mining itself. Eighteenth-century mining is being judged by the eyes of the 21st century without considering its evolution. We cannot and should not judge with a current vision past events or facts which, although they could now be criticized, were not perceived this way in their time. The past helps us learn and evolve and this is what mining has done. 

Mexican mining needs to be judged considering its reality, without bringing past myths or prejudices into the present. We need public policy that acknowledges the importance of this sector nationwide, that seeks to strengthen this activity to generate mechanisms that attract and retain long-term national and foreign investment, that dispels myths and provides real incentives for such investment, offering legal certainty and security to promote the growth and sustainability of a sector that for centuries has significantly contributed to the country’s development.

Photo by:   Karina Rodriguez