Mining Sector Sees Falling Investment in 1Q23

Foreign Direct Investment (FDI) in Mexico's mining sector fell to US$419 million in 1Q23, representing a 63% decrease compared to the US$1.13 billion recorded in 1Q22. According to a report from the Ministry of Economy, the country registered lower investments in the metallic mining, oil and gas and related services sectors. 

Year-on-year, FDI in the Mexican mining sector decreased by 66.5% in 2022, reaching US$1.6 billion against the US$2.8 billion recorded in 2021. Furthermore, CAMIMEX highlights that US$4.8 billion were invested in 2021, considering the entire mining-metallurgical sector.

Projections for FDI in 2023 are not encouraging due to recently approved mining reforms, which have generated concerns among investors. The majority of foreign mining companies in Mexico are of Canadian origin and they have expressed concerns about the decrease in investment due to these reforms.

On the other hand, INEGI reported that industrial production grew by 3.7% at an annual rate in the month of February. Production exceeded January's 2.8% growth rate and analysts' projection of 2.7%. This was the highest increase recorded in three months. In addition, INEGI reported that mining-metallurgical production increased significantly in January, despite experts’ warnings last year that the sector was at risk of stagnation due to weak demand in other key sectors, such as construction and steel.

Mining activities increased 4.5 percent at a monthly rate. Likewise, mining-metallurgical production grew 3.6 percent at an annual rate, driven mainly by the production of zinc, lead, gold, copper, silver, coke, non-coking coal, gypsum and fluorite. INEGI highlighted that zinc had a real annual variation of 6%, lead 5.9%, gold 4.4%, copper 3.7%, silver 3.2%, coke 2.8%, non-coking coal 2.8%, gypsum 1% and fluorite 0.3%. Despite the promising increase, INEGI indicated that sulfur production had a 12.7% decrease, along with iron pellets (3.5%).

Among other activities, generation, transmission, and distribution of electricity, water supply and gas through pipelines to the end consumer grew by 5.1%. Meanwhile, construction increased by 3.3% and the manufacturing industries sector rose by 2.5% on an annual basis.