Mexico's Mining 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.

Mexico holds a notable position in the global mining sector due to its abundant resources, longstanding mining culture, and untapped potential. Although the industry is among the most regulated and socially responsible in the country, it faces ongoing criticism and is often branded as a dirty sector. CAMIMEX, however, has vowed to show the true impact of mining as a social, economic and well-being driver in Mexico.

CAMIMEX comprises a total of 124 operational units representing approximately 90% of Mexico's mining value. In 2022, most investment in mining activities came from Mexican companies at 57%, followed by the United States at 21%, and other countries at 14%. In 2023, there was a 3% global decrease in investment in mineral exploration. Despite this, Latin America maintained its status as a leading destination for exploration investment, accounting for 25% of the total. In Latin America, Mexico holds a prominent position in the production of 16 different minerals, securing the top spot in silver, second in fluorite, third in sodium sulfate and wollastonite, fourth in lead and celestite, fifth in magnesium sulfate, barite, and molybdenum, sixth in diatomite and cadmium, seventh in salt and zinc, eighth in gypsum, ninth in gold, tenth in copper, eleventh in kaolin and manganese, fourteenth in feldspar, eighteenth in graphite, seventeenth in iron, nineteenth in silica sand, and twenty-third in phosphate.

In 2022, Mexico's mining activities were concentrated in key states, with Sonora leading at 31.4%, followed by Zacatecas at 26.1%, Durango at 11%, Chihuahua at 10.2%, and Guerrero at 5.1%. The total value of national mining production in 2022 amounted to MX$316.9 billion (US$15.7 billion), marking a 5.3% decline from 2021. Gold, copper, silver, iron pellets, and zinc stood out as the top five minerals, contributing to 86.3% of the overall mining production.

The mining sector continues to play a pivotal role in Mexico's development, contributing significantly to the nation's economic landscape. In 2023, it constituted 9% of the industrial GDP and 2.9% of the national GDP. Beyond its economic impact, the sector provided essential inputs for 70 key industries and generated employment in 696 communities spread across 212 municipalities. 

In 2023, the sector hired 417,380 people directly, with over 2.5 million indirect jobs added by December, creating 11,201 new positions. In 2022, the average wage in mining, based on IMSS data, exceeded the national average by 33%. Currently, 72,088 women work in Mexican mining, making up 17.3% of the total workforce according to IMSS figures. Tax contributions in 2022 totaled MX$72.9 billion, with income tax (ISR) comprising 79.6% of the total. 

In 2022, the mining sector invested MX$5.8 billion in environmental conservation, representing 14% of SEMARNAT's budget of MX$40.8 billion. CONAGUA reported that the companies affiliated with CAMIMEX represent about 0.27% of the national volume of water concessions. In addition, approximately 70% of water consumption came from treated and recirculated wastewater.

In 2022, there was a 13% increase in clean energy investment from mining companies compared to 2021. A total of 4,636GWh of energy from clean sources was produced and consumed by 42 mining operations, constituting 38% of the overall energy consumption. CAMIMEX stressed that a long-term goal for the chamber is to continue to drive high standards in ESG practices, especially in sustainability, workplace health and safety, and inclusion and diversity.

While CAMIMEX’s figures show the positive impact mining has in Mexico, the López Obrador administration has criticized the sector for not being socially and environmentally responsible. The president has promoted several initiatives to limit mining activities in Mexico.  On May 8, the Mining Law was published in the Official Gazette of the Federation, aiming to reduce the duration of mining concessions from a maximum of 100 to 80 years. The text also establishes that exploratory activities are reserved for the State through the Mexican Geological Survey (SGM) or through assignments to entities of the federal public administration.

The Mexican Association of Mining, Metallurgy and Geology Engineers (AIMMGM), CanCham and CAMIMEX have expressed concern about the new law, especially about leaving exploitation in the hands of the government, as SGM lacks the resources to properly carry out this activity. In addition, CAMIMEX warned that the Mining Law could cost the nation up to 420,000 direct jobs and US$9 billion in lost investment in the coming years. 

On Feb. 5, President López Obrador presented another reform package, which includes a ban on open-pit mining permits and water concessions in places with low water availability. Pablo Méndez, Managing Partner, EC Rubio, told MBN that the proposed changes have increased concerns about investment from both domestic and international companies, despite Mexico's prominent position as a leading global mining producer. Méndez stressed that, if the proposal is accepted, its impact would extend beyond copper projects, affecting gold and silver projects as well, as most of them are open-pit mines. Luis Humberto Vázquez, President, AIMMGM's CDN, called on the sector to understand that the proposed reform cannot be enforced without thorough debate, however. Vázquez emphasized that, as the role of mining in the country's development becomes clearer, it is likely that there will be modifications to the current Mining Law, as well as these new reform proposals.

Due to the lack of political certainty, CAMIMEX pointed out the sector needs greater collaboration with the authorities to promote mining and foster economic growth. With the next government, CAMIMEX aims to achieve several objectives, including the reactivation of concessions, exploration, legal certainty, competitive fiscal conditions, and collaboration with mining states on sector development policies.