Iron Mining: A Pillar of Progress, Sustainability in Mexico

Q: What opportunities remain in Colima for iron production and what characteristics have allowed Peña Colorada to position itself as the supplier of 30% of Mexico's iron needs?

A: Although Mexico is not among the world's leading iron producers or reserve holders, it has sufficient resources to meet domestic needs, especially for steelmaking. The Pacific coast has significant reserves. The crucial aspect lies in locating economically viable deposits. The triumph of Peña Colorado, which contributes 30% of Mexico's iron production, can be attributed to its efficient beneficiation method, developed over five decades ago. 

Q: What value do ArcelorMittal and Ternium bring to the joint venture?

A: The participation of ArcelorMittal and Ternium is a cornerstone of Peña Colorada’s success, as these companies provide invaluable insights and expertise. This unique joint venture capitalizes on ArcelorMittal's extensive global experience and Ternium's proficiency in project execution. These partnerships bolster Peña Colorada´s capabilities, enabling it to stay abreast of industry trends and meet stringent standards, ultimately driving its continued success.

Q: What are the primary challenges iron mining faces in Mexico, and how do these challenges differ from those in silver and copper mining?

A: While mining iron does share some challenges with other metals, it also faces its own distinct set of obstacles. One of the key challenges is the volume of iron production, which presents logistical hurdles due to transportation costs, unlike precious metals like gold and silver. Margins in iron mining also tend to be narrower as the industry predominantly serves industrial applications, rather than producing high-value end products. On the other hand, iron ore processing typically requires minimal chemical use compared to other mining processes, simplifying compliance with environmental regulations.

Q: What prompted the decision to open an office in Sonora and how does this align with the company's strategy?

A: Establishing an office in Sonora was a strategic decision that recognized the state’s position as Mexico's main mining center. Although Peña Colorada is not directly involved in mining activities in Sonora, the area offers many opportunities. This expansion allows easier access to vital suppliers and contractors for upcoming projects, complementing our existing resources in Colima.

Q: What ESG measures has Peña Colorado taken to ensure sustainability?

A: Peña Colorada's dedication to sustainability extends beyond compliance with the ESG framework; it is deeply ingrained in its operations. The company's environmental initiatives are meticulously crafted to minimize its ecological footprint through the deployment of cutting-edge solutions. For example, we implemented a slurry pipeline for product transport that harnesses the force of gravity rather than relying solely on energy, a measure that mitigates the environmental impact associated with conventional transportation methods. 

Peña Colorada's proactive stance on water management can be seen in its strategic investments in dry stacking facilities, which yield remarkable water recovery rates. These initiatives not only underscore Peña Colorado's commitment to environmental stewardship but also highlight its proactive approach in embracing sustainable practices.

Q: What is the outlook for iron production and demand in 2024 and how does Peña Colorada plan to capitalize on this?

A: Peña Colorada anticipates a prosperous year ahead for iron ore production, with demand outpacing production capacities. The majority of the company's iron ore is already allocated to our valued customers and shareholders. While the outlook for Peña Colorada's iron is positive, it is also promising for its iron pellets, which are highly sought after for their crucial role in producing flat steel products through direct reduction. Our company is firmly committed to enhancing production capacity to meet this escalating demand, leveraging its prominent position as a premier supplier in the Mexican market.

Q: How might the outcome of the 2024 elections impact iron mining in Mexico?

A: The outcome of the 2024 elections carries significant implications for iron mining in Mexico, as it may lead to notable changes in regulatory policies. Even if we do not agree with everything the government does, Peña Colorada is committed to responsible mining practices. We want to work with future administrations to make sure mining is good for society and the environment.

Despite regulatory uncertainty, Peña Colorada remains optimistic about the future of iron ore mining in Mexico. We recognize the fundamental role that minerals such as iron play in the country's economic growth and future development. It is crucial to share that message with the public, investors, and authorities. Iron is indispensable to several industries, especially in the production of steel, which is essential for infrastructure, transportation, and many other sectors. As the world strives to transition to renewable alternatives, steel remains a critical component. 

Peña Colorada is a Mexican mining joint venture by ArcelorMittal and Ternium. It has offices in Colima and Sonora and is actively involved in exploring, exploiting, and processing iron ore, serving as a crucial supplier to the domestic steel industry.