Rubén de J. Del Pozo Mendoza
President of Zacatecas District
Association of Mining Engineers, Metallurgists and Geologists of Mexico
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Expert Contributor

Mining: A Laconic Look Today

By Rubén de J. Del Pozo Mendoza | Fri, 10/16/2020 - 08:50

I am convinced that observation is one of the best practices in decision-making. With that premise and oriented to the mining industry, I found it very interesting to carry out an exercise to tackle the moment and address, from different perspectives, the main events. The purpose was to have a brief, clear and founded perception of the status-quo. 
Here is my conclusion and its reasons.

FROM THE OUTSIDE IN

The COVID-19 pandemic is the contingency of global scope that has most influenced our lives and, of course, mining. Our industry has seen an increase in the price of precious metals; gold has fleetingly exceeded the US$2,000 psychological barrier and a combination of economic and market factors have been created so that this asset has favorable conditions for its health contingency growth: crisis, fear, uncertainty, change and a lack of certainty about the future of inflation. All this has provided a respite from the low production that conditions have imposed on the producers of this metal and also of silver. Gold has thus become a refuge from the conditions that overwhelm us with global uncertainty. More investors may look to gold for protection as long as the storm lasts but the scenario is not the same for industrial metals; for example, zinc has fallen to its lowest price in three years and everything indicates that in economic terms, 2021 will be an even more challenging year.

Legal certainty has been a pending theme of this and previous governments in Mexico. Just remember that the mine shutdowns in Zacatecas, Oaxaca, Sinaloa and others demonstrate the need for compliance to be rational, objective, clear, competitive and, above all, enabling. With this, the path of trust will be consolidated and we will move safely toward reaching agreements that affirm the continuity of mining operations, guarantee investment, promote employment and contribute to the sustainability of the environment and social welfare.

FOR THE REST OF 2020, WHAT CAN WE EXPECT? 

Taking CAMIMEX 2020's annual report as a reference, the outlook for 2020 is seen, on the one hand, as a scenario of opportunities and a more constructive international trade environment with the approval of the T-MEC and the easing of the trade dispute between the US and China. However, due to the COVID-19 pandemic, it is also challenging for the global economy in terms of growth. In this context, it is important that the projects that have seen a strong investment in 2020, including Los Verdes/Santa Ana in Sonora, La Fortuna in Durango, Media Luna in Guerrero, Guadalupe de los Reyes in Sinaloa, Samalayuca in Chihuahua and Mina Pilares in Sonora, be followed up, supported and consolidated for the start of operations in every sense.


OPPORTUNITIES FROM THE CRISIS

The moment has taught us a tremendous lesson in ensuring that the industry functions even in times of a pandemic. While it is true that digitalization in mining was a topic on the table, by enabling remotely operated processes, making artificial intelligence viable, achieving augmented reality and modernizing the stock of processes that allow 5.0 mining, it is now re-emerging with much greater relevance.
The possibilities are then found in technology, but also in partnerships, creativity and personal skills. All this will make it possible to capitalize on projects that create leaner operations, optimize costs and ensure work continuity.

FINAL REFLECTION

We know that the worst of the crisis is yet to come. Economic experts predict that 2021 will be a year of great challenges and worse difficulties. What is more serious for mining is that the scenario is combined with public policies that are sometimes uncertain and do not point to the best of times; however, mining has shown itself to be an industry that can be one of the arms that drive the economy in Mexico; for example, through the generation of cleaner, safer and well-paid jobs; the increase of national and foreign investment in current and new exploration, exploitation and development projects; the precise observance of its fiscal obligations; the economic spillover and promotion of welfare in the communities where it operates; and the expansion of foreign exchange earnings and more.

However, all of the above is contingent on the government. The government needs to be an ally in mining’s development, creating interlocution bridges and defining a legal framework that promotes healthy relations, implementing laws transparently and expeditiously, urgently ensuring the patrimonial security of companies and generating fiscal incentives that promote the company's property security.
Despite the adverse factors, I am convinced that the best of people, institutions and corporations can be revealed by great challenges. In times of pandemics, mining has demonstrated its benefits and solidarity, and now a reciprocal government response is required.

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by Rubén de J. Del Pozo Mendoza