Mexican Mining Sector Reports First Drop in Production in 2022

Mexico's mining output for its five top metals declined in July due to project delays, lower ore grades and operation closures. Consequently, experts expect several mining companies to reduce their production in 2022 and even change their projections.

According to the National Institute of Statistics and Geography (INEGI), the sector experienced its first drop in production in 2022. In July, mining production decreased by 2.4 percent compared to production in the same period of 2021. INEGI explained that national production increased between 0.7 and 4.7 percent during the first months of the year, 0.6 percent in May and 0.1 percent in June. However, no increase was reported in July.

Gold production decreased 4.6 percent to 6,235kg, while silver production fell 4.4 percent to 346,357kg. Copper production decreased 1.4 percent to 39,093 tons, lead production decreased 1.1 percent to 16,006 tons and zinc production decreased 0.1 percent to 35,339 tons, reported INEGI.

Experts had already warned that there would be a drop of around 7.5 percent in national production in 2022, mainly due to decreasing metal grades. Specifically for gold producers, production is expected to be down about 10 percent compared to 2021, while copper is expected to drop 4 percent. Silver production was expected to remain unchanged, but its figures also dropped, reported BNamericas.

For instance, Fresnillo announced that it expects to produce between 600,000 and 650,000oz in 2022, less than the 751,200oz produced in 2021. The decrease is mainly due to lower grades and volumes from Noche Buena, which is at the end of its useful life. However, the company expects to produce between 50.5Moz and 56.5Moz of silver, which is in line with its 2021 production. The company said that while it expects to maintain its silver production in 2022, it will still be affected by lower grades at Saucito and delays at the Juanicipio project.

Newmont forecasted that in 2022, its Peñasquito mine would produce 475,000oz, which is less than the 660,000oz forecast in 2021. The decrease is mainly due to lower grades obtained. Meanwhile, for silver, the company expects to produce 29Moz, which is close to the 30Moz produced in 2021.

Regarding copper projects, Southern Copper projected production of 992,000t in 2022, down from the 958,200t produced in 2021. Previously, the company said that in 2022 production would fall due to the relocation of activities in lower-grade and lower-volume areas of its Buenavista project. However, the company expects production to pick up in 2023.