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News Article

Challenges of the Industry: Companies’ Vision

By Alejandro Ehrenberg | Sat, 07/11/2020 - 14:56

Mining is a fundamental pillar for Mexico's growth, since it is a trigger for other key industrial sectors. To take advantage of Mexico’s full mining potential, it is essential that companies combine economic benefits with social development. The government must provide legal certainty and asset security to companies. "It is not enough to have large mineral reserves: to achieve mining development, we must emphasize sustainability, health and social affairs," said Xavier García de Quevedo, Vice President of Grupo México, during his participation in a digital conference to celebrate Miner's Day 2020.

The conference, organized by the Undersecretariat of Mining, in collaboration with Mexico Business News and Mexico Mining Review, brought together leaders from the different areas that make up Mexican mining. Distinguished directors of some of the large companies operating in the country participated in the panel entitled “The Challenges of the Industry: Vision of Companies.” Moderated by Francisco Cervantes, President of CONCAMIN, the panel started with the participation of García de Quevedo, who stressed that mining is at the base of all production chains. García de Quevedo said that Mexico has continuously fallen among foreign direct investment (FDI) destinations for mining. “In 2012, Mexico was among the Top 5 FDI destinations. However, today it is in 29th place according to the Fraser Institute,” he pointed out.

After García de Quevedo’s intervention, Fernando Alanís, CEO of Industrias Peñoles and President of CAMIMEX, commented that mining in Mexico is not only important because of its contribution to GDP, employment and tax collection. Mining, above all, is important because of its enormous contributions to the country’s social development. "There is mining in 650 communities in 22 states of the country. This activity provides basic services, strengthens the social fabric and generates formal and well-paid jobs," said Alanís. The future of the industry requires effective communication with the authorities and the general public, he concluded.

Gerardo Kuri, CEO of Minera Frisco, stressed that it is imperative that mining companies study and define the direction that the demand for minerals is taking. He added that mining is a strategic partner to navigate the new normal. "All this in a framework where the safety and health of mining workers is privileged," he concluded.

Octavio Alvídrez, CEO of Fresnillo plc, said mining has been Mexico's flagship industry throughout its history. He stressed that mining cities like Zacatecas, Guanajuato or San Luis Potosi have a “face of quarry and a silver heart.” Alvídrez highlighted the great risk that miners assume in the exploration stage, where the success rate is sometimes only 1 percent. For investments to continue reaching Mexico, Alvídrez stressed the importance of deductibility of exploration expenses, of the liberation of mining concessions and of long-term fiscal certainty.

Following Alvídrez's intervention, Luis Felipe Medina, General Director of Agnico Eagle México, said that the company he represents is not in Mexico temporarily because he is confident that Mexico is a good country for mining. "The great challenge is to rely on hard data to build agreements and manage to speak the same language among all interested parties," Medina stressed. A comprehensive mining public policy that rules all industry players is key for mining in Mexico to continue evolving.

Jody Kuzenko, CEO of Torex Gold, began his participation by emphasizing that Torex Gold's success would not be possible without the 2,000 employees and contractors working at its Guerrero mines. In 2019, Torex was the second-largest gold producer in Mexico and achieved 7 million hours without accidents. Likewise, Kuzenko highlighted the role of the company's workers to face the risk that COVID-19 implies. Regarding the risks involved in the mining sector, Kuzenko indicated that a long-term public policy for mining within the framework of rule of law rule is key to face them. "We want to create many more decades of mining development in Mexico, promoting gender parity in the industry," he said.

Finally, Pedro Rivero, Vice President of Operations of Minera Autlán, stressed that communication is essential to achieve the social license to operate. He noted that there is a wide divergence of opinion among industry players, which speaks of disinformation. After speaking about the challenges that the economic crisis will bring as a result of the pandemic, Rivero said that Mexican mining has a great opportunity: “The value chains of the key products in the energy transition are moving away from China. Mexico has many mining products necessary in this transition. It is urgent that we define a strategy to take advantage of the opportunity,” Rivero said.

Alejandro Ehrenberg Alejandro Ehrenberg Journalist and Industry Analyst

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