Mining Services Decline but Mining Sector Sees Growth

In October, mining-related services in Mexico saw a significant year-on-year decline of 41.2%, marking the steepest drop since the start of statistical records in 1994. While the oil and gas sector experienced a contraction, the mining sector reported growth, which is expected to continue due to strong mine production and rising metal prices, despite ongoing legal uncertainties.

The decline was mainly driven by a nearly 7% decrease in oil and gas extraction in October, alongside a 5.4% drop from January to October. In contrast, the mining sector experienced a 1.8% increase in October, contributing to a year-on-year growth of 1.3% for the first 10 months of 2024. However, growth shows deceleration compared to the 2.7% increase observed in September.

Experts highlight that the mining sector has been significantly impacted by President López Obrador’s policy to freeze new concessions, coupled with the uncertainties surrounding the Mining Reform and the proposed open-pit mining ban. However, last week, optimism was restored in the sector following President Claudia Sheinbaum's announcement that her administration would review the proposed ban on open-pit mining. She cautioned that an outright prohibition could lead to counterproductive outcomes.

“Open-pit mining warrants a thorough review, as activities such as sand extraction for cement production and lithium mining, critical for national development, are conducted using this method. It is vital to assess the specifics of the constitutional reform’s provisions,” Sheinbaum stated. She emphasized that the review would focus on ensuring environmental protection and would be independent of corporate interests. 

David Betancourt, Founder, Mining Risks Advisors, highlighted that Sheinbaum’s announcement provides clarity regarding her administration’s stance. “After 60 days in office, the president is bringing transparency to an issue previously dominated by speculation. Every step forward is significant,” he remarked.