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Development Bank Strengthens Role As A Financial Intermediary

Israel Gutiérrez - The Mining Development Bank (FIFOMI)
CEO

STORY INLINE POST

Mon, 10/22/2018 - 12:42

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Q: What are the biggest challenges FIFOMI faces when it comes to facilitating access to capital?
A: We are focused on strengthening our role as an intermediary between the Mexican mining industry, mining companies and financial institutions, not only in Mexico but also around the world. This is a fairly novel service in the industry. We find that we can better meet the needs of the sector if we join forces with the financial industry to provide mining companies with a wider variety of financing options. Banks like the Industrial and Commercial Bank of China (ICBC) have contacted us in international forums with the purpose of connecting their investors with Mexico. We can provide a path to achieve this. Investors and international banks often contact us because they know that we can ease their entrance to the country and connect them with the right companies. For example, in any given project we can offer a credit line up to FIFOMI’s maximum limit. By collaborating with other banks, we can increase this limit and help develop the industry by financing smaller projects a lot faster. We have success stories in mining Mexican states like Chihuahua and Sonora.
We also want to bring small and medium enterprises into the spotlight to promote a healthier mining industry. But only a small number of Mexican mining companies participate in the stock market, while in other countries, such as Canada, SMEs are often listed on various exchanges. We also offer technical assistance to small mining companies. One of the biggest challenges we face is creating a more democratic access to finance. The economic reforms that were put in place by President Enrique Peña Nieto helped improve this by enhancing competition and availability of better interest rates. Such significant structural reforms naturally take time to be implemented. Mexico’s financial institutions, such as BANCOMEXT, NAFIN, the Agriculture and Rural Development Bank (FIRA), The National Development Bank for Agropecuary, Forest and Fishing Industries (FND) and FIFOMI are all working together toward achieving these goals.
Q: What are the main areas of opportunity you have identified in the financial culture of the mining industry?
A: We need to change the resistance that Mexican companies have toward participating in the stock market, which is more common in Zacatecas, Sinaloa, Chihuahua, Durango, Sonora and Guerrero. Domestic companies need to learn how to invest more wisely and how to take advantage of the financial tools available. We will continue working with the BMV and taking advantage of the information provided by SGM. The use of these systems has been a success in Canada for the Toronto Stock Exchange and its distribution channels as they have instant access to the country’s geological information. This is an obstacle we are working to overcome in Mexico. We also believe that BIVA, Mexico’s second stock exchange, will be able to attract a great deal of capital. We believe they are committed to facilitating access to capital and providing more financial tools to the industry.
Q: How can Mexico better prove its ability to provide long-term investments?
A: To gain the trust of investors we must show economic and fiscal discipline through a well-structured model that relies on infrastructure and security. This was the main priority during the administration of President Peña Nieto. We are prioritizing trade negotiations to make sure that all treaties are accurate in reflecting the interests of our industries. We have a strong Ministry of Economy with the priorities of modernizing the Public Registry of Mining, the digitalization and automation of Mexico’s geological information within the GeoInfoMex platform and the strengthening of technical and financial support to companies. In addition, we work on technological models involved with Industry 4.0, which benefits companies. This is extremely important given the fact that many companies that left Mexico during the downturn are starting to come back now that mineral prices are starting to rise again.

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