Mining Services Take a Hit in 2023

Demand for mining services plummeted in 2023 due to López Obrador's government policies, which have increased uncertainty and halted projects. Experts say the outlook for mining services in 2024 is still uncertain, especially due to the coming elections.

INEGI reported that mining services fell 26.2% in November 2023. This was the steepest drop in mining services in 2023. Raul Garcia, President, CIMMGM, said the drop follows lower demand for exploration services. García pointed out that the freezing of new concessions and the approval of the Mining Law, which gave the Mexican Geological Service exclusivity in exploration, were the main disincentives.

"This 26% drop is very serious. What services are affected? Mainly those of primary exploration. Companies dedicated to exploration were a very large sub-sector of mining, but there is no more exploration. What we have are layoffs, total and partial closures, and that is very serious," Garcia told BNamericas. Layoffs range between 30% and 40% in the exploration sector. "There is no work, so personnel are being cut. The sale of services is falling and with it the work of laboratorians, geologists, topographers, etc."

Garcia emphasized that the mining services outlook for 2024 is still an unknown. Experts assure that performance will largely depend on the 2024 elections. However, greater stability is expected regardless of the winner. “We believe that the next government will follow the same path, as the same political party will likely win the election. We do not expect a radical change, but stability. Mexico will continue to be attractive to investors. We work for clients from five countries in Latin America and Mexico is doing better compared to those other countries,” said David Vizcarra, Founder, Vizcarra Consultores MX.

The sector is also expected to grow as new projects come to life in 2024. Luca Mining's Tahuehueto project, located in Durango, is expected to reach commercial production in 1Q24.  Grupo Mexico's Buenavista Zinc project in Sonora is in its start-up process, which was planned to be completed in 4Q23, but has been postponed to 1Q24 due to technical adjustments. Sonoro Gold's Cerro Caliche is expected to start operations in August 2024, while Endeavour Silver's Terronera project is scheduled to start production in 4Q24.