Mining Sector’s Production Value Grows 0.1% in August 2024

Mexico's mining production value saw a 0.1% increase in August 2024, according to data from INEGI. This growth in the mining sector contrasts with a 0.5% contraction in the overall industrial production value during the same period.

INEGI’s Monthly Indicator of Industrial Activity (IMAI) reported a contraction in the industrial sector’s production value when compared to July 2024. Of the sectors that compose this indicator, construction saw a decline of 3.7%, mining increased by 0.1%, manufacturing grew by 0.3%, and the generation, transmission, distribution, and commercialization of electric power, along with water supply and natural gas through pipelines to the final consumer, rose by 1.4%. 

Year-on-year, IMAI reports the construction sector experienced a 4.1% decline compared to August 2023, while mining saw a decrease of 1.3%. In contrast, manufacturing industries posted a 0.7% increase, and the sector covering electricity generation, transmission, distribution, along with water and natural gas supply to final consumers, grew by 2%.

The mining sector's performance was primarily driven by mining-related services, which recorded a 3.9% increase compared to the previous month. This was the only subsector with positive results, as oil and gas extraction contracted by 0.1%, while the mining segment excluding oil and gas remained flat with a 0% variation.

Year-on-year the overall mining sector contracted 1.3%. As for the subsectors, oil and gas extraction contracted 6.5%, while mining excluding oil and gas extraction increased 9.8% and mining-related services grew by 4.1%. 

Mineral Production and Challenges for the Sector

According to INEGI, as of July 2024, Mexico's gold production totaled 5,117kg, marking a 1.8% increase compared to the same period in 2023. Similarly, silver production reached 315,682kg, representing a 19% rise. Zinc production was 31,209t, up 92.2%, while copper production fell by 7.3% to 39,566t. Lead production increased by 47.4%, totaling 11,986t.

The latest version of Banxico’s Report on Local Economies revealed that among the main challenges for mining executives were rising transportation and electricity costs, the appreciation of the Mexican peso, and uncertainty surrounding legal reforms, particularly delays in granting extraction permits. In northern Mexico, electoral uncertainties in Mexico and the US reduced demand for mineral inputs, including iron ore. 

Environmental factors, such as extreme temperatures in Baja California and Sonora and droughts in San Luis Potosi, further impacted production. Labor disputes in Durango and Michoacan and insecurity across regions also disrupted operations and increased costs, as reported by MBN.