Mining One of the Most Attractive Sectors for InvestmentBy Paloma Duran | Tue, 07/27/2021 - 13:33
Bank of America (BOFA) assured that Mexico continues to be an attractive investment destination; especially in the mining industry. The financial institution announced that it is increasing its investments in the country, which will be present for at least 50 years.
Several investors and financial institutions consider Mexico one of the top investment destinations in Latin America and in emerging countries, since "it is one of the nations that has a great macroeconomic stability and is increasingly integrated into the North American bloc," said Emilio Romano, Director of BOFA.
“There is an appetite for investment in Mexico and it is in very specific segments. On the contrary, in the energy sector for instance, there is uncertainty about the applicable rules and we see a resistance to increasing investments. Nevertheless, in other sectors such as infrastructure and mining we have seen much interest," said Romano.
The federal government has managed to keep public finances stable, which can be seen in the debt / GDP ratio that did not increase despite the pandemic, Romero explained. BOFA estimates that the Mexican economy will grow between five and six percent in 2021. However, growth could be delayed due to new COVID-19 outbreaks.
Despite the positive outlook, Romero emphasized that Mexico faces a private investment crisis, since institutions and companies are being more careful in regards to their investments. Mexico's investment confidence is below what is desired and it is considered the main obstacle for the country to grow economically, Romero said. "This is what prevented us this year from exceeding 10 percent economic growth. If we can regain that confidence in private investment, we can aspire to higher economic levels."
BOFA highlighted that there are positive expectations regarding better market conditions and certainty, which is why it is investing more in Mexico. “Our trust in Mexico is long-term, we think differently from other banks, but we do it with total conviction and responsibility. We will invest in Mexico in long-term projects, not for the next 2 or 3 years, but for the next 50 years.”
Recently, CAMIMEX experts said that 2021 will bring a better outlook for the mining industry. During 1Q21, the Mexican mining sector reported foreign direct investment (FDI) of US$1.05 billion. It is the second best first quarter the sector has had since 2014, when it attracted US$1.158 billion. According to the Ministry of Economy, mining FDI during 1Q21 was 176 percent higher than in 1Q20, when it only received US$381 million.
Senator Miguel Ángel Lucero Olivas told MBN that with the 1Q21 FDI records and a positive outlook, investment is expected to maintain its upward trend in the mining sector. "If we add to the equation the economic recovery of the post-pandemic world, we can affirm that Mexico will have a very good year for mining activity and investment."