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News Article

FIFOMI Braces Up Mexico’s Mining Industry

By Alejandro Ehrenberg | Wed, 07/01/2020 - 13:20

Fideicomiso de Fomento Minero (FIFOMI) has financed 250 SMEs in Mexico’s mining sector from January to May 2020. FIFOMI’s loans during this period amount to MX$2.3 billion (US$101.4 million) according to La Jornada.   

Alfredo Tijerina, FIFOMI’s Director General, told La Jornada that financing is only directed at companies whose activities will be beneficial for the community in which they are carried out. Tijerina stressed that throughout 2019, FIFOMI gave loans to 300 companies for a total of MX$6.2 billion (US$268.8 million).

Milenio notes that FIFOMI’s current portfolio is estimated at MX$3.7 billion (US$160.4 million), which represents an increase of 21 percent compared to December 1, 2018. That is, it has grown 1.1 percentage points per month.

In an interview with Mexico Business News (MBN), Tijerina explained in more detail FIFOMI’s criteria for handing out loans. “Usually, we operate according to the demand for resources. We welcome mining projects that have financially viable reserves. We give preference to projects with strong ESG indicators. Also, we are seeking to support minerals useful for decarbonization and the energy transition, like lithium or copper.”

FIOMI’s added value in the financing process is to determine if the project is commercially and technically profitable. It all starts by determining if the project has marketable ore reserves. After FIFOMI analyzes a project, it works hand in hand with the company to determine potential benefits for all stakeholders. FIFOMI provides technical guidance to project developers. This is one of the agency’s main added values. Milenio reports that during the COVID-19 health emergency, FIFOMI continues to provide technical assistance via web.

Tijerina explained to La Jornada that FIFOMI has four types of loans: 1) direct: delivered by FIFOMI; 2) factoring: given to companies in the value chain, with the collection invoice as collateral; 3) second-tier: through financial intermediaries; 4) structured: where several financial institutions participate and FIFOMI only vouchsafes that the project is viable.

“We also finance projects through financial intermediaries. We work with syndicated loans, wherein we try to participate with a low ticket. Our goal is to increase the number of loans we grant. We usually limit the amount of the loan to US$10 million. We want to ​​diversify our portfolio with small amounts in syndicated loans, where private banks put up most of the capital,” Tijerina commented to MBN.

Alejandro Ehrenberg Alejandro Ehrenberg Journalist and Industry Analyst