Image credits: Jingming Pan
News Article

Mexico Returns to High Levels of Gold Production

By Paloma Duran | Tue, 09/14/2021 - 11:00

Mexico is bound  to break its fifth consecutive year of falling gold production streak, as increased demand, new projects and higher prices for the yellow metal have caused 1H21 gold production to break 2020 records.

From January to July, the country produced 41.3 tons of gold, representing 31 percent more than the production during the same period in 2020, INEGI reported. Currently, the country ranks ninth among the largest gold producing countries. The main gold producers in Mexico are Fresnillo, Newmont, Torex Gold, Agnico Eagle Mines and Alamos Gold, which together represent 60 percent of the gold produced in 2020.

In 2015, the country reached an all-time production high totaling 60,325 kilos produced during the first half of the year. However, the country has embarked on a  downward trend since then. In 2020, the country produced a mere 31,576 kilos, representing a drop of 47.8 percent in 5 years.

The COVID-19 pandemic and production problems at several major gold mines led to a steeper drop in production. Nevertheless, according to experts, gold is expected to perform very well in 2021. “Gold mining is the most profitable industry in the world and began the year with 20 percent operating margins. Since then, margins have more than doubled, due to an increase in the price of gold as well as a decline in production. The average gold miner is currently four times as profitable as the average S&P company, yet it only has 1/3 the valuation. Coast Capital believes that there is no more attractive industry to invest into,” James Rasteh, Founder of Coast Capital told MBN.

Gold production began to recover in the second half of 2020, when the country reported a 1.3 percent increase compared to 2019 records. Last year, the state of Sonora was the top gold producer with 29.8 percent of the national value, followed by Zacatecas with 18.8 percent and Chihuahua with 16.1 percent.

Due to the positive outlook, many companies in Mexico have increased their budgets for gold projects, causing a 43 percent increase in investment compared to 2020. Currently, there are 12 companies that are developing important gold projects in Mexico and are expected to begin production between 2021 and 2024. Among the projects are Camino Rojo of Orla Mining, Los Filos of Equinox, Juanicipio of Fresnillo and MAG Silver, among others, together they will produce 1.2Moz of gold.

The data used in this article was sourced from:  
El Economista, MBN
Photo by:   Jingming Pan
Paloma Duran Paloma Duran Junior Journalist and Industry Analyst