Mexican Mining Sector Loses Significant FDI in 2022

Mexico has lost MX$25 billion (US$1.3 billion) in mining investment due to the government’s policy of stopping to grant new mining concessions, said Mexico’s mining chamber. Moreover, several mining companies holding concessions have not been able to continue with the development of their projects as the approval of permits has also become more difficult.

The Mexican Mining Chamber (CAMIMEX) announced that Mexico’s foreign direct investment (FDI) in the mining sector fell 55.9 percent year-over-year in the first nine months of 2022. The Chamber stressed that if the investment continues to follow this downward trend, the industry’s FDI will be lower than expected for the year.

From January to September 2022, the FDI totaled US$1.53 billion, less than the US$3.47 billion captured in the same period 2in 021, reported the Ministry of Economy. Recently, CAMIMEX highlighted that investment would fall around 15 percent, dropping from US$4.8 billion in 2021 to US$4 billion in 2023.

Although experts emphasize that investment in 2022 has been depressed due to external factors such as high inflation caused by the Russo-Ukrainian war and the global economic slowdown, political uncertainty in Mexico continues to be the biggest concern among investors 

“The fall in global stock markets, including Canada, where most of the mining companies that operate in Mexico are located… caused many companies to withdraw their projects due to the low cash flow from their development. Inevitably, the announcement of the nationalization of lithium caused an environment of uncertainty in mining companies, mainly in exploration companies,” Ariel Navarro, VP Exploration, Reyna Silver, told BNamericas.

CAMIMEX pointed out that the government’s stance of not granting more concessions caused 181 foreign companies to leave the country in 2021. Furthermore, 822 projects have been delayed due to the lack of permits being issued. "I do not doubt that if this negative trend to not grant new concessions and permits continues, these numbers will be higher in the coming years," said José Gutiérrez, President, CAMIMEX.

The outlook remains uncertain in the short term. However, mining leaders hope that the new Minister of Economy, Raquel Buenrostro, will be able to put an end to the government’s policy of withholding concessions. Karen Flores, Director, CAMIMEX, stressed that new proposals are being prepared for the new minister to promote an industrial plan that benefits mining activities. Currently, the mining sector contributes 6.7 percent to the country’s GDP. Flores highlighted that if the plan is embraced by the ministry, its contribution could be significantly higher.

According to CAMIMEX, there are 24,066 concession titles representing 16.83 million ha in Mexico, equivalent to 8.59 percent of the national territory. In addition, production-stage mines occupy less than 0.10 percent of the territory.