Mining Activities Fall 2% in 2023

Mexican mining activities saw a 2% decline in 2023 compared to 2022, with December marking the most substantial monthly setback at 4.9%, INEGI reported. The factors that contributed to this decline were the blockade at Newmont's Peñasquito gold and silver mine, the crisis at Altos Hornos de México (AHMSA), and the implementation of new mining policies.

INEGI data reveals that only January, February, and April 2023 exhibited year-over-year increases, while the remaining months saw a downturn. Mining-related services reported 1.7% growth over the past year. Nevertheless, December experienced a 0.8% drop, following a substantial 26.2% decline in November. These figures show that the industry faced more challenges in the latter part of 2023, reported BNamericas.

Industry experts pointed out that the issues at Newmont and AHMSA played a major role in the decline of mining activities. Regarding Newmont, on June 7, 2023, 2,800 workers from the company called for increased wages and profit payments from the company, before going on strike. Miners from the National Union of Mine, Metal and Allied Workers (SNTMMSSRM) accused Newmont of violating their 2022-2024 collective labor agreement, arguing that profit payments (PTU) should increase from 10% to 20%. After fourth months of negotiations, Newmont agreed to pay workers a fixed amount equivalent to 60% of wages lost since the strike began, aiming to mitigate the financial impact that this could have on employees. Furthermore, the company agreed to increase workers’ wages by 8%, which is in line with the mining sector wage increases for 2023.  The company officially declared the strike ended on Oct. 16, 2023.

Regarding AHMSA, its operations have been suspended for the past 15 months due to its inability to meet its financial obligations, including contributions to IMSS, INFONAVIT, and FONACOT, payments to CFE and PEMEX for supplies and services, debts to suppliers and service providers, outstanding wages for its workers, and dues to the union.

Experts have stressed that the sector has also been affected by the lack of new concessions and the government's decision to grant exclusive exploration rights to the Mexican Geological Survey (SGM). Industry insiders highlighted that the uncertainty surrounding the Mining Law has led to the suspension of numerous mining operations, especially in exploration. This has affected demand for related services, reported BNamericas.

On Feb. 5, the President presented a new package of reforms, including a ban on open-pit mining permits and a halt on water concessions in areas of low water availability. AIMMGM Sonora, the Sonora Mining Cluster, the Sonora Mining Association, Minera Sonora Siglo XXI, and the Royal College of Miners of San Javier have urged Congress to carefully analyze the proposed initiative. The organizations' rejection of López Obrador's reform is based on the negative effect it will have, if approved, on Sonora and other states. The package is already being rejected by several opposition parties such as PRI and PRD. However, PAN and Movimiento Ciudadano announced that they will first analyze the proposals before making a decision.