Mining Faces Prolonged Downturn Amid Regulatory Pressures

Mexico’s mining sector is expected to face continued challenges in 2025 following a 0.8% contraction in 1Q25. Mining-related services were hit even harder, plummeting by 27.9%, according to the Monthly Industrial Activity Index published by INEGI. Data underscores a disconnect between Mexico’s mining sector performance and the favorable conditions in global commodity markets.

In 2024, the production of metallic and non-metallic minerals increased by only 1.3% compared to 2023, while services supporting the mining industry declined by 7.9%, despite a favorable pricing environment for metals. 

Forecasts for 2025 point to a 6.4% drop in real mining output, driven by a projected 5.9% contraction in oil and gas extraction and a 1.5% decline in metallic and non-metallic mining. Mining-related services are expected to fall even further, with an anticipated 18.3% decrease.

A moderate recovery is projected for 2026. Total mining activity is forecast to grow by 1.0%, while metallic and non-metallic mining may rise by 3.4%. Mining services could see a modest rebound of 1.8%.

“The contraction in non-oil mining is largely driven by the broader economic slowdown and uncertainty surrounding domestic regulations, as well as potential policy changes in the US under Donald Trump,” an anonymous economist told BNamericas. “However, with USMCA renegotiated and after several years of stagnation, conditions should begin to improve.”

Foreign Investment Plummets Amid Regulatory Uncertainty

Foreign direct investment (FDI) in Mexico’s mining sector, including oil and gas, fell sharply in 2024, totaling US$1.5 billion, down 56% from the US$3.5 billion reported in 2023. FDI in metallic mining dropped even more, reaching just US$364 million, a decline of 83% from the US$2.1 billion recorded the previous year. This represents the lowest level of investment since records began in 2006, underscoring the growing reluctance of investors to commit capital to Mexico’s mining sector, despite elevated metal prices.

The sharp downturn in FDI coincided with growing regulatory pressure under the López Obrador administration, including repeated threats to ban open-pit mining. Investor confidence was further eroded in late 2024 when the government raised both special and extraordinary mining duties. Although President Claudia Sheinbaum later withdrew the proposed open-pit mining ban, the ongoing suspension of new concessions since 2018 and persistent delays in permitting have continued to stifle investor interest.

Exploration activity has also contracted significantly since the enactment of the May 2023 mining reform, which granted Mexico’s Geological Survey (SGM) exclusive rights to carry out exploration work. The lack of detailed implementation guidelines for the reform has added to the uncertainty, further limiting private sector participation.