Mining Sector Foresees Investment Drop

Karen Flores, Director General, Mexican Chamber of Mining (CAMIMEX) foresees a difficult environment for mining investment in 2022, as she assured that funding will drop significantly due to the lingering uncertainty created by both the current and the previous government. 

CAMIMEX estimates that the country will receive over US$3 billion in 2022, an amount significantly lower than the US$4.2 billion received in 2021. According to the chamber, the sector never did recover from the Tax Reform of 2014. The recently approved Mining Law Reform has created further uncertainty. CAMIMEX said that over 2,000 projects have been suspended since 2014. In addition, the absence of new concessions worries players in the sector. 

“Unfortunately, we are headed downward since 2014 until now. With the tax reform of [2014], investment in exploration has fallen 60 percent. As for general investment, we had a small uptake the past year, but fell short of the estimation by 15 percent ,” Flores said. 

Regarding the Mining Law Reform, Flores said that the uncertainty it creates in mining activities may also affect the benefits that can be spread to remote communities. She also said that the current administration’s policies do not allow a future recovery in the sector, but it seeks dialogue with authorities to foster mining activities. 

“The Mining Law reform creates great uncertainty, particularly the section that reserves any strategic mineral for the exclusive use of the State… minerals are already nationalized via the Constitutional Article 27, this creates uncertainty among mining companies operating in the country and, of course, for new projects that could be developed,” Flores added. 

Flores highlighted the importance of mining in the reactivation of the economy, being the first link in the productive chain of other industries. She also pointed out that if the country had a public policy that really fostered the mining industry, it could create more than 350,000 direct and indirect jobs in addition to the already existing 3 million jobs, which currently create an investment of over US$1 billion.

Mexico ranked 34 in the Fraser Institute’s 2021 Annual Survey of Mining Companies, which evaluates the attractiveness of investment in 84 mining countries and jurisdictions. This is the best score the country has had since 2018, as Mexico ranked fourth among the Latin American countries. The report highlighted the increasing uncertainty regarding the exclusion of the private sector in the exploitation of key resources, such as lithium. It also qualified the freeze on new mining concessions as an “industry killer.”