Mexico Security Outlook- First Look at MMF 2024 PDAC

This is a preview of what’s being discussed at Mexico Mining Forum 2024 PDAC. Don’t miss our upcoming interviews with panelists and guests to get more industry insights.

A successful mining operation goes beyond technology and an efficient extraction process. Companies operating in Mexico must be knowledgeable about the security challenges facing the industry and how to address potential threats, highlights Jorge Tello-Peón, Director, Madison Intelligence Mexico.

Despite the government's optimistic stance on the country's security outlook, the reality reveals a significant surge in crimes like coercion, homicides, and cargo theft. The current administration, under President López Obrador, has witnessed unprecedented violence, marked by over 180,000 homicides and territorial clashes among drug cartels.  

Tello-Peón emphasized that the discrediting of institutions, along with government acts and omissions have contributed to this unfavorable landscape. In addition, criminal organizations often have stronger ties to communities, providing them with jobs, infrastructure, public services, and medicines, among other benefits. This has led individuals to consider circumventing established authorities or entering negotiations with organized crime, jeopardizing principles, people and operations in the long term. "México's security challenges are both severe and numerous, requiring immediate and enduring commitments. Present security measures address symptoms but fall short of addressing root causes,” says Tello-Peón.

CAMIMEX recently stated that criminal attacks against mining companies increase their operating costs by between 10% and 20%. The chamber adds that the figure could be higher considering that mining companies must invest heavily in personnel training and hire more security guards. Organized crime employs diverse pressure tactics, including financial coercion and direct violence (threats and kidnappings), says Tello Peón. He added that, during the 2024 elections, various crimes have surfaced, including direct violence against candidates, vote manipulation, and organized crime influencing candidate positioning. 

Luis Vázquez, President, AIMMGM, reported that some companies have even paid off criminal gangs, resulting in a 3% increase in the final cost of minerals. Vázquez added that states with a long mining history like Chihuahua, the State of Mexico, Guanajuato, Sonora, and Zacatecas rank among the states with the highest perceived insecurity. 

Mining companies face not only the physical threats of in-person crime but also the increasing danger of cyberattacks. In 2024, cybersecurity reemerged as a significant concern for mining companies, marking its return to the top spots of the list of challenges faced by companies for the first time since 2020, securing the 8th position. EY attributes this resurgence to the digitalization of the sector, the surge in remote work, and geopolitical tensions such as the Russian-Ukraine war. Escalating concerns among mining leaders are centered around threats to their intellectual property, a concern expected to intensify with the increasing investment in ESG initiatives.

In 2022, Guacamaya hackers carried out a cyberattack that not only impacted public institutions, but also mining, oil and gas companies. In 2024, Alamos Gold also suffered a cyberattack that led to the public exposure of sensitive corporate data. In response to the evolving landscape, key companies such as Torex Gold have elevated cybersecurity to a top corporate and operational priority, recognizing the urgent need for robust measures to protect against cyber threats.

Tello-Peón emphasizes the importance of having better strategies, recognizing that a one-size-fits-all approach is ineffective.  Tello Peón advocates for strategic solutions, such as forming alliances with mining clusters and chambers, utilizing social intelligence, accessing reliable data, fostering collaboration with authorities like SEDENA, National Guard, and the government, implementing security prevention and reaction protocols, engaging in negotiation tables with authorities, and risk and crisis management strategies.