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News Article

Mexico Remains an Attractive Destination for Mining Investment

By Antonio Gozain | Thu, 07/07/2022 - 10:46

The mining industry continues to play a vital role in Mexico’s economy, contributing 3 percent of the country’s GDP and 9.6 of the industrial GDP. While the sector is facing challenges globally, Mexico remains an attractive destination for the mining industry, said José Jabalera, Director General of Mining Development, Ministry of Economy (SE).

Currently, Mexico’s mining sector creates over 413,000 direct jobs and 2.3 million indirect jobs. With a preliminary investment of US$4.25 billion in 2021, the total production value in 2021 amounted to MX$338.18 billion (US$16.9 billion), according to SE. Mining activity is present in 24 states across Mexico, as operations intersect with 212 municipalities and close to 700 communities. However, 82.5 percent of the total mining value is produced in five states: Sonora, Zacatecas, Chihuahua, Durango and Guerrero.

Mexico’s mining industry is among the top 10 global producers of 17 different minerals, said Jabalera. The production of gold, copper, silver, zinc and iron pellets contribute to 85 percent of the country’s total mining-metallurgical production value. The total investment in Mexico’s mining sector comes for 59 percent from Mexican capital. Twenty-eight percent comes from Canada, 4 percent from the US, 2 percent from China, 2 percent from Australia and 5 percent from other countries, Jabalera added.

Although the issue is pointed out as a challenge by some industry players, talent and human capital are actually one of the main strengths of Mexico’s mining industry. “We have a great human capital, recognized by companies. There are more than 45 universities, institutes and public research centers that offer degrees related to earth sciences in the country,” said Jabalera. The average schooling of mining professionals is 11.7 years, 2 years more than Mexico’s average. In addition, mining professionals earn 36 percent higher salaries than the national average.

“The Mexican Geological Survey (SGM) is a great service for companies,” Jabalera emphasized. SGM offers information for the exploration, development and exploitation of mines, highlighting mineral deposits, geochronological data, archaeological zones, protected natural areas, vegetation and land use, hydrography and geophysics, among other data.

Currently, there are 165 mining projects under development in Mexico, which are divided into four categories: metal projects, non-metal projects, municipal inventories and prospects for further study.

Mining clusters play an increasingly important role within the industry, said Jabalera: “Clusters increase the competitiveness of mining regions and foster the development of local suppliers and value chains. These organizations promote the link between the productive sector, government and academic institutions.”

The competitiveness of Mexico’s mining industry is underpinned by additional macroeconomic factors, such as the Mexican peso’s stability over the past 4 years and a federal anticorruption policy, said Jabalera. In addition, the government committed not to increase taxes in real terms during the current administration. “Despite the absence of new concessions, the government has respected all existing contracts,” added Jabalera

Mining has a robust institutional framework that regulates its actions, he said. “We can affirm that mining is one of the most regulated industries in the country. This provides legal certainty to investors and avoids conflicts with the communities that host this activity,” he added.

Antonio Gozain Antonio Gozain Journalist and Industry Analyst