Enrique Maldonado
Regional Director North Mexico
Grupo Calidra
View from the Top

Mexico is Lime Supplier’s Platform to Latam

Mon, 10/22/2018 - 11:53

Q: What are your main priorities in Mexico in the short to medium term?
A: Our growth in 2017 in comparison to 2016 improved, and we expect similar results for 2018. Mining continues to be an important base for the Mexican economy and it will grow strongly if prices remain positive. This implies growth for the company as well. We foresee an increment in demand for lime in the coming years so we are preparing for this by increasing our production by 50 percent through an additional lime kiln. By March 2019, we will start producing 400t/d, which equals 12,000t/m. We have already sold 25 percent of this amount and we expect to sell 80 percent of it by the end of 2019. Our biggest clients are expanding greatly, which is good news for us.
Q: How is the rise of base metals prices impacting your business?
A: Gold, silver, copper and zinc are the metals that demand the most lime. But nontraditional metals such as lithium are beginning to grow as well. There is an important lithium project in Sonora and the design engineers have already announced that it will need calcium carbonate. We want to be the project’s main supplier as soon as it starts to produce. Also, our idea is to build a calcium carbonate plant in Hermosillo at the same time as our new lime kiln, and we are investing MX$300 million for both projects. The plant will be sustainable and dust free.
Q: Given the increasing competition in Mexico’s mining industry, how do you maintain your added value?
A: The secret is to maintain quality, service and availability. This is not about having the lowest prices as the lime industry implies a big capital investment, but we have competitive prices. We can guarantee timely deliveries, quality in our product and good service. We make that possible by producing to no more than 80 percent of our capacity to make sure that when a client suddenly requires an unexpected amount of lime, we can provide it without a problem. When production starts to continuously surpass 80 percent, that is when we start to consider installing a new kiln. The quality of the quarry is where the quality of lime starts, and we have the best raw material in Sonora state. We also have a new area in the company that is in charge of making alliances with fleets to make sure that transportation is efficient. Fleets are often willing to give us a good price since we are one of the few that can provide constant business and timely pick up and drop offs of our material.
Q: How will the company achieve its goals of Latin American market consolidation by 2020?
A: In Mexico we already have a reputation for being a serious and ethical company. Our biggest challenge is not to expand in Mexico alone but to gain the confidence of South American miners. Our sales are growing in Argentina and in Colombia where we have just installed new kilns. The most complicated country to enter so far has been Peru, where there is a lot of market competition. We have a plant in Peru that produces 400t/d and we have not been able to gain a stronger foothold in the market despite our higher-quality product and competitive prices. Despite this, we are acquiring more clients every day. Once we consolidate Peru, Colombia and Argentina, we can start to consider entering other countries in the region.
Q: What will be the impact of the upcoming elections?
A: We are worried certain populist policies that may be implemented. Depending on the President-elect's priorities for mining, it could lead to higher taxes as that is one of the fastest and easiest ways for a government to get income. This is not good for business and it can scare away investment. Populist governments are also less likely to overturn the 10-year exploration deductibility policies that have caused exploration investment to drop. I would like to see the incoming administration impose a new fiscal reform where companies can deduct the investments in the first year or sooner. Authorities need to change their mindset to promote investments with policies that contemplate long-term payments via taxes rather than stopgap taxes.