Grupo México Sees Positive Outlook for 2024

Grupo México has a positive outlook for its mining division in 2024, even though this division affected the company's financial results in 2023. The company is expected to benefit from the new market dynamics, in which there will be a possible shortage of copper.

The company forecasts copper production of 28,700t, an increase of 25.2% over the 22,919t mined in December 2023. Zinc production is expected to reach 54,000t in 2024. Grupo México said that the market dynamics will be interesting, as there will be a copper deficit in the market, coupled with low inventory levels.  "Following a significant reduction in production announced by some producers during 4Q23, market expectations of a surplus seen early in the final quarter will be replaced by concerns about a potential deficit," company officials said.

Grupo México previously announced its desire to boost its copper projects: El Pilar, Buenavista Zinc and El Arco. El Pilar, located in Sonora, will soon start operations with an estimated annual production of 36,000t of copper cathodes. The project has a useful life of 13 years and is expected to use the latest SEDE technology. Meanwhile, the US$416 million Buenavista Zinc project in Sonora is 99% complete. The project is in its startup process, which was planned for 4Q23. However, it has been postponed to 1Q24 due to technical adjustments. 

The company reported that it expects to produce 100,000t/y of zinc and 20,000t/y of copper from Buenavista Zinc. "When operational, this facility will double zinc production capacity and provide more than 2,000 jobs on the operations front," Grupo México said. El Arco, on the other hand, located in Baja California, has mineral reserves that exceed 1.23Bt. Grupo México said the project will produce 190,000t of copper and 105,000oz of gold/y.

Grupo México reported a 27% decrease in EBITDA and a 9.6% contraction in revenues compared to the same period in 2022. The quarterly sales decline is attributed to a 7.9% decrease in copper sales, coupled with a downturn in molybdenum and zinc prices. Additionally, sales were affected by a US$369 million adjustment in the market value of open sales contracts due to the volatility in metal prices. Grupo México noted that the mining sector was hit in 2023 despite a 2.3% increase in copper production driven by operations in Peru and the United States.