Canadian investors are betting on Mexico to start new projects across many sectors. Mining is no exception, but industry leaders warn that current regulatory conditions do not favor further exploration and production efforts.
During CANCHAM Day 2023, Enrique Zorilla, President, CANCHAM Mexico, highlighted that Canada is the second largest source of FDI for Mexico, investing over US$52 billion. He also mentioned that the country is planning investment projects of up to US$10 billion.
Zorrilla mentioned that USMCA plays a crucial role in the country’s trade and investment policy as it brings legal certainty to investors, but also entrepreneurs and consumers across North America. “USMCA modernizes and expands goods and services’ trade rules,” he stressed adding that Canadian investments span several industries including mining, energy, automotive, aerospace, pharmaceutical, logistics, infrastructure, tourism and education.
Mexican Mining Sector
According to Canada’s Trade Commissioner Service, there are over 138 Canadian companies operating in the Mexican mining industry. Furthermore, Mexico ranks seventh overall in Canadian mining assets, abroad.
Event attendants identified the role Mexico could play in the energy transition as sourcing from clean energies and storing it will require more minerals than current technologies do. However, experts stressed that Mexico should work on improving the business environment for mining companies.
Experts mentioned that the Mining Law reform, which labels exploration a state-exclusive activity, hinders Mexico’s potential. “The energy transition cannot exist without mining, in the same way that mining cannot exist without exploration,” said Alberto Orozco, CEO, Capitan Silver. He stressed that for every 1,000 prospects, only one results in a viable mining project, owing to the many requirements this process entails, which makes it crucial to promote exploration.
Karen Flores, Director CAMIMEX, says exploration has been experiencing a downward trend for over a decade, with a 40% drop in exploration. However, the new regulation will completely stop this activity in the country.
This situation is risky considering new requirements for clean energy demand more minerals. At the event, Armando Ortega, Director, CANCHAM’s Mining Task Force, cited a study by Baker Mckenzie that states a greener economy requires between 400 and 500 new mines between 2025 and 2035 to extract key minerals like copper, lithium, nickel, manganese, uranium, palladium, fluorite, bismuth, germanium and rare earths. “There will be a lack of fluorite, there will be a lack of lithium, bismuth, copper, etc. in the years to come,” Ortega added.