José Jaime Gutiérrez
Director General
Grupo Minero Bacis
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Insight

Global Mining a Harsh Environment that Demands Competitivity

Mon, 10/22/2018 - 11:01

The mining sector is ever more international, and Mexican mining companies face the threat of becoming an endangered species, according to José Jaime Gutiérrez, Director General of Grupo Minero Bacis. “Mexican mining has decreased in competitivity due to many factors, such as the cost of capital,” he says. The key is to ensure they remain competitive in a globalized market.
But guaranteeing competitivity is easier said than done. Gutiérrez proposes a series of factors that have allowed Bacis to endure in the mining market for over three centuries. Careful management of costs and pursuit of a sustained expansion is the first tip. “Our success comes from having very low costs compared to the national average. This has allowed us to grow our company over 10 times,” he says. “Keeping production costs low also enables us to operate at a zero-debt level.”
Exploration should also be a priority as it is directly related to the future reserves of a company. In Bacis’ case, it has been more profitable to fund its own operations. “We explore with our own resources. We own some of the most important reserves in Mexico, with resources of over 100 million silver equivalent ounces,” he says. “We will keep prioritizing exploration as our company’s base and growing our reserves as we have not yet explored more than 40 percent of our concessions’ land.”
In 2018 Bacis expects to produce 10 million ounces of silver equivalent, accounting for a 30-35 percent YoY rise in production. Bacis’ current mill capacity is 1,500t/d but the aim is to increase it to 2,200t/d in the short term. “This implies a significant investment in infrastructure of about US$45 million,” he says. “One the main factors for mining competitivity is to understand it as a capital-intensive industry.”
The Bacis Group is a family-owned company with various operations in Durango stretching 100 years. It was founded by a UK company and originally named Bacis Gold and Silver and listed on the London Stock Exchange. In Mexico, the Gutiérrez family has owned the company since the 1940s. Since then, diversification has proven to be another crucial factor for competitivity and nowadays the Bacis group consists of several companies, while the family also has other related but separate businesses. “We have had participation in various mining companies such as Austin Bacis. We have also participated in other companies that are related to the mining sector but not part of Bacis. These correspond to a personal diversification of our business, but with Bacis remaining the priority,” he explains.
Despite being a family company, Bacis understands the need to take the next step in its organizational growth through institutionalization. “Becoming more institutionalized is one of our current key programs to professionalize the company,” explains the Director General. “The possibility of listing the company in the stock exchange remains an attractive option to consider in the future,” he adds.
As for Gutiérrez' final tip to remain competitive, he firmly believes it is simply fundamental to understand and consider those factors that are exogenous to the company’s control. In Bacis’ case, its primary focus is on Durango but certain aspects of the state are not conducive to mining activity. “The state has a significant lag of public infrastructure, which is its greatest weakness,” he says. As for the country outlook, Gutiérrez mentions that Mexico lacks a stronger and better-defined rule of law. “This is one of the main problems for mining in Mexico. Our grain of sand is aiming to be a role model in productivity, efficiency and as a socially responsible company.”