Mining: Key Pillar for Mexico's Economic Reactivation

You can watch the video of this presentation here.

During the last presentation of Mexico Mining Forum 2021 on Friday, Feb. 12, Fernando Alanis, President of CAMIMEX, highlighted the role of the mining industry as one of the strongest and most necessary sectors in the reactivation of the Mexican economy.

Mexico ranks among the Top 10 world producers of 17 minerals, according to Alanis. Mining represents 2.3 percent of the country’s national GDP and 8.1 percent of its industrial GDP. “Mexico is a mining country; 70 percent of the nation’s territory has mining potential and currently only 30 percent has been explored. Mining has historically been concentrated in the center and north of the country. However, this activity can benefit more states,” Alanis said.

At the moment, mining is present in 668 communities in 212 municipalities and 24 states. It generates 379,000 direct jobs and 2.2 million indirect jobs. Alanis said that during the COVID-19 pandemic, a commitment was made with CAMIMEX subsidiaries, which represent 90 percent of the value of mining in Mexico, to support mining employees.

Alanis explained that mining stands out for its social and environmental commitment to communities. Mining companies often build and develop roads, electrification, water and waste management systems in nearby communities and, most importantly, they provide health and education services. “Mining happens in remote places in need for development opportunities, not only in infrastructure but also in education, entrepreneurship and health services to improve quality of life.” In 2019 alone, investment in social and sustainable development in the mining industry amounted to MX$5.327 billion (US$267.16  million).

CAMIMEX recently released its 2020 Sustainability Report, in which the chamber states mining is an important activity that generates wealth, which is not only distributed among companies but also communities. The report emphasizes that mining contributes to local, regional and national economic growth, social development and protection, care and restoration of ecosystems and the environment. "It is impossible to think about cultural development and social welfare without mining," said Alanis. This report represents CAMIMEX’s first effort in demonstrating the industry’s commitment to society through factual data.

Alanis explained that in addition to promoting regional development, the industry also supports the development of other economic activities, such as construction, transportation and trade. "Mining imports and exports represent 474,000 tons of materials per year. If the mining sector is promoted, other sectors will also grow," he said. In terms of direct monetary contributions, Alanis also highlighted the role of mining operations. “It is unfortunate to hear that mining does not pay taxes. In the last 4 years, mining has paid MX$131.016 billion (US$6.572 billion).”

Alanis also addressed the elimination of the deductibility of preoperative and exploration expenses after the 2014 tax reform, which led investment in exploration to decrease by 40 percent. “We hope that the government will begin to encourage mining activities, as all mining countries do. This alliance is necessary for the sector to develop,” he said. Mexico needs certainty and long-term public policies that promote fiscal competitiveness, regulatory competitiveness, social certainty and understanding of the mining sector, he added. “Initiatives can be achieved through a mining table that allows good coordination between the legislative and executive powers.”

On Wednesday, during the panel, “2021: A Year of Rebirth for Mexico's Mining Industry?” Alanis explained that the challenges for 2021 include COVID-19, the misconceptions of the mining sector that do not allow the population to see the true image and positive impact of the sector, as well as new legislative initiatives that directly or indirectly impact the sector and its position as one of the pillars of the country's economic recovery. Regarding the potential reforms to energy regulations, Alanis today said that should these be accepted, it would seriously impact the mining sector as this would increase energy costs, reduce competitiveness and especially affect health and the environment. "It is an issue that is being discussed a lot in CAMIMEX and I hope it will be reviewed in depth since it will not only impact mining but the entire country."