Mining Sector Loses Significant Amount of FDI in 2022
In 2022, the foreign direct investment (FDI) attracted by the Mexican mining sector fell below expectations. Experts argue that the main reasons for the drop in investment were inflation, rising costs and nationalist policies that increased uncertainty.
The Ministry of Economy reported that FDI in the mining sector plummeted to US$1.603 billion in 2022, 66.5% lower than the US$4.8 billion obtained in 2021. Previously, the Mexican Mining Chamber (CAMIMEX) announced that it expected a drop from US$4.8 billion in 2021 to US$4 billion in 2023. However, the figure was higher in 2022.
According to experts, the decline in investment was caused by high inflation, the global economic downturn and the lack of new Mexican concessions. "The non-granting of new concessions will bring the stagnation of the mining sector as a consequence, and today we are beginning to feel the effects of the absence of new mining projects. Of those that are operating in the country today, most are mine expansions and not new mines. This is generating serious repercussions," said Karen Flores, Director, CAMIMEX.
CAMIMEX pointed out that the government’s stance caused 181 foreign companies to leave the country in 2021. Furthermore, 822 projects have been delayed due to the lack of permits granted. "I do not doubt that if this negative trend to not grant new concessions and permits continues, these numbers will be higher in the coming years," said Jaime Gutiérrez, President, CAMIMEX.
The outlook remains uncertain in the short term. Mining leaders hoped that the new Minister of Economy, Raquel Buenrostro, would be able to put an end to the government’s policy of withholding concessions. However, in December 2021, Buenrostro said that Mexico has a serious corruption problem as well as misuse of mining concessions. "We receive complaints of wrongdoing because mining concessions were granted to people who worked in the Ministry of Economy. Heavy corruption issues are apparent and we are trying to analyze the information to be able to develop an action plan. As it stands, it does not make sense to continue granting concessions," she said.
Many experts agree the government has a distorted view of the mining industry, which threatens the sector's performance and investment. Currently, the mining sector contributes 6.7 percent to the country’s GDP. Moreover, there are 24,066 concession titles representing 16.83 million ha in Mexico, equivalent to 8.59 percent of the national territory. In addition, production-stage mines occupy less than 0.10 percent of the territory, reported CAMIMEX.