Commitment, Support for Small MinersMon, 10/22/2018 - 12:51
Q: What are Zacatecas’ main priorities when it comes to the mining industry?
A: We have three main priorities in the mining industry, including developing talent, supporting small miners and strengthening the local and regional supply chain. We have a long-term and ambitious vision for the sector but our first priority will always be to help the local and regional companies adapt to the changes in the industry.
When it comes to talent, we created a one-of-a-kind program at the Zacatecas campus of the National Polytechnic University to allow metallurgical engineering students to get hands-on experience in both classrooms and in mines. We greatly believe in training and preparing the next generation of miners.
The state is also prioritizing small mining businesses and we are collaborating with medium to large companies to create more bridges and opportunities. We are helping small miners identify areas of opportunity and even connecting them with financial tools. The state is closing agreements with FIFOMI to make sure that small miners have enough capital to develop projects and reactivate the state’s traditional mining districts.
Our third focus is to strengthen the local and regional supply chain to make sure it can meet the needs of medium and large miners. We are motivating local companies and mining clusters to promote regional unity. We offer consulting and certification to make sure suppliers meet the industry’s requirements.
Q: How is the state improving financial opportunities for the industry?
A: We can intervene by creating schemes that work for the industry, as has been done for automotive and aviation sectors. We are incorporating not only commercial banks into the scheme but also development banks to offer different financial models for projects. This helps because commercial banks often require highly-detailed reports and specifications that small miners cannot provide when they are just starting a project or small operation. On the other hand, development banks are more flexible and may just ask for a deposit.
We collaborate with NAFIN, to build different strategies. We have also created trust funds for a project in collaboration with banks where, for example, for every MX$1 we invest, a commercial bank invests MX$2. Everyone wants loans at low rates and small deposits but that is not possible. We help by providing models either with a low rate and large guarantee or a high rate and a small guarantee to find an optimal middle point. We also offer a Silver Fund that provides a low rate and requires a deposit that is much smaller than what commercial banks require. We have a technical committee and a validation system that can select projects with potential.
The state is also helping businesses complete their paperwork so they have more success with the financial system. We must use collaborative schemes because mining projects are extremely capital intensive. If they only required MX$30,000 it would be much easier to give direct loans without so many requirements.
Q: Why should mining companies invest in Zacatecas over other states in Mexico?
A: Our main differentiator as a mining state is the support we provide to small miners. Other states, such as Sonora and Chihuahua, have many more projects but they do not have many small miners. While it is a risky focus because many projects will not become a mine, we have had cases of success that have made important discoveries in the state and have been able to develop them thanks to our support. We are following in the footsteps of Hidalgo, which has been the only state in the country to successfully implement a model that works for small miners.