Insecurity: Key Concern for Mining Companies

Insecurity remains a significant concern for the mining industry in Mexico, with theft, kidnapping, extortion, and protection payments posing daily challenges. These issues have led to a 10% to 20% increase in operating costs. The sector is calling for private-public collaboration to address this pressing issue, both in terms of physical and cybersecurity, and avoid impacting the country’s competitiveness. 

CAMIMEX reports that criminal attacks on mining companies result in operating cost increases of over 20%. This figure could rise further when factoring in continuous training and the increased employment of security guards. According to AIMMGM, some mining companies have to pay off criminal gangs, resulting in a 3% increase in the final costs of minerals. 

According to the Fraser Institute's 2023 Mining Survey, Mexico ranked 74th out of 86 jurisdictions evaluated for its attractiveness to investment. Anonymous sources interviewed by the Fraser Institute expressed concerns about the rising cartel activities in the state where they operate. “There is an active cartel presence without any protection from Mexican police or authorities,” said the president of an exploration company. 

During the Mexico Mining Forum 2024 PDAC, Jorge Tello-Peón, Director, Madison Intelligence Mexico, highlighted the 10 most violent states in Mexico: Colima, Morelos, Baja California, Chihuahua, Zacatecas, Guanajuato, Guerrero, Sonora, Quintana Roo, and Michoacan. Among these states, mining activities occur in Chihuahua, Zacatecas, Guanajuato, Guerrero, Sonora, and Michoacan. On the other hand, he noted that in states like Yucatan and Durango, the latter with strong mining activity, security levels can be compared to those in European countries. 

Illegal mining also poses a significant challenge for Mexico's mining industry. Senators from the Labor Party (PT) called for action to combat illegal mining, citing security concerns and criminal activities, including extortion and direct mineral extraction by criminal groups, as reported by MBN. They urged authorities to shut down illegal mining sites and certify the legality of minerals before exportation.

Organized crime is attracted to the illegal mining of gold and silver because of the substantial profits it offers, especially as mineral prices are on the rise. This trend is more common in Mexico, Brazil, South Africa, China, Peru, Indonesia, Vietnam, and India, reports the Global Initiative Against Transnational Organized Crime (GI-TOC). 

Beyond Physical Security

While physical security remains a top concern for mining companies in Mexico, digitization and automation of mining operations are raising fears of increased cyberattacks. Globally, cybersecurity has become a significant concern for mining CEOs, securing the eighth spot in EY's Risks and Opportunities Survey 2024.

In an interview with MBN, David Tintor, Director of Operations, TBSEK, noted that mining companies are appealing targets for cybercriminals because of the relatively easy way to quantify damage. “If you are a mining company, and cybercriminals disable your mill, every second it is stopped costs about US$5.97. Multiply that by 3,600 for an hour, and the financial impact can accumulate, even for days. They make it clear: Pay US$1 million or suffer damage worth US$10 million,” he explained.