Investment Counters Lack of Concessions

Due to President López Obrador's policy of not granting new mining concessions, companies operating in Mexico have increased their exploration works in the already granted territories. The industry reports that the energy transition will pressure them since certain minerals will face more demand in the coming years.

According to the Ministry of Economy (SE), the concessioned territory for mining activities currently totals 8.59 percent of the total land, 2 percent less than the 10.64 percent registered in 2018. According to Jaime Gutiérrez, President, Mexican Mining Chamber (CAMIMEX), exploration works have become essential since deposits are not forever and minerals are limited. Furthermore, the halt in concession granting will pressure the industry. According to CAMIMEX, just in 2022, mining companies invested over US$502 million in exploration activities, which represents a 28.2 percent increase against 2021. 

The energy transition will also pressure the industry since the demand for key minerals like lithium, copper and silver is expected to increase. According to Wood Mackenzie, 9.7 million tons of copper will be required in the next decade to meet the goals of the Paris Climate Agreement. The automotive industry is also expected to pressure the Mexican mining sector since the transition from internal combustion engine vehicles to electric vehicles requires large amounts of nickel, manganese, copper and lithium. According to S&P Global, 24kg of copper are needed to construct a fuel-powered vehicle while an electric car requires 139kg. 

Armando Alatorre, President, CIMMGM, said that exploration is the equivalent of seeding the land in agriculture and said that the mining sector has not explored enough in the past years. “We need to invest more in exploration to reap the benefits in 10 years. Exploration experienced a downward trend for years, thus we have been seeding very little. We need to switch this trend to have the required production for the next 10 and 20 years to meet new technologies’ demand,” Alatorre told Expansión. 

The federal government has adopted a confrontative stance toward the mining industry, accusing it of corruption and environmental damage. On Dec. 07, 2022, MBN reported that federal authorities announced that no more permits for open-pit mining projects will be issued during López Obrador’s remaining government term, set to end in September 2024. For industry insiders, this measure is damaging the industry and is based on an outdated misconception about the industry. German Larrea, CEO, Grupo México, said that nowadays, most open-pit mining projects are environmentally friendly since they operate with cutting-edge technology.