Mining Sector Kicked Off 2022 With Strong Recovery

Mining, along with other key industries, experienced an important recovery at the beginning of the year, according to INEGI. Data shows two consecutive months of growth as of January 2022, when the industry grew 7.0 percent against December 2021. 

Foreign direct investment (FDI) in the mining sector increased tenfold in 2021, according to Mundo Minero. The investment made by companies was a result of the reopening of activities after COVID-19 restrictions were lifted. According to S&P’s global report, in September 2021 junior and intermediate companies reached investments of over US$14.8 billion. 

This rise in metal prices is expected to continue until 2025, which is explained mainly by the high demand for metals in the energy transition process the world is facing, as well as the war in Ukraine, as Russia, which has been sanctioned by the West, produces around 7 percent of the world’s nickel and aluminum.

The main metals experiencing price increases are gold and copper. Companies that exploit these minerals are expected to receive margins of over 85 percent for gold and even 100 percent for copper in 2022. “Copper companies have tremendous opportunities in Mexico as it is home to world-class deposits and has many undiscovered exploration deposits,” Steve Robertson, CEO, Infinitum Copper, said

The government’s role is key in the development of the industry. According to Efraín Alva, Director of the Extractive Industries Unit, Ministry of Economy, the ministry’s most important mission is to create legal conditions that promote investment and assure investors that legislative initiatives will not result in sudden movements, such as cancellation of concessions or a retroactive change in regulations.

Uncertainty is the name of the game at the moment, however, as a precedent has been set with the cancellation of two mining concessions granted to Minera Gorrión, Almaden Minerals’ subsidiary, after the Ministry of Economy failed to carry a consultation with the Tecoltemi ejido. “We consider the Court's decision a big and extremely dangerous mistake, since it signals that any mining concession granted could be canceled due to the absence of an “Indigenous consultation,” when there are no guidelines, procedures, nor is it clear how the Mexican state can comply with its obligation, affecting the legal certainty of the thousands of holders of mining concessions,” said Ruben Cano, Founding Partner, CR Legal Partners Mexico, to MBN.