Mining’s Importance In The Present Set To Expand In The FutureBy Pedro Alcalá | Wed, 01/26/2022 - 12:06
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If the last two years have proven the resilience of Mexico’s mining industry, then the years to come will prove its central importance to the country’s economy and prosperity, said Efraín Alva Niño, a central figure in the sector’s current landscape.
Alva Niño is the Director of the Extractive Industries Unit at the Ministry of Economy, created in April 2021 to replace the Underministry of Mining, eliminated in 2020. Due to its recent creation, for Alva Niño the promotion of the industry and its image for the purposes of attracting investment are a big part of his present role. Alva Niño made this clear when he proclaimed that "Mexican miners are recognized as some of the best worldwide."
Alva Niño also stated that his unit had an interest in clarifying certain misunderstandings that were “usually poured into the general population” which negatively impacted the image of the Mexican mining industry and made it more difficult to recognize that the country is one of the best destinations for mining investment. “In spite of the fact that mining in Mexico is strongly legislated and in spite of the heavy tax burden that has to be covered by the sector, the international industry has always recognized that the Mexican mining landscape is highly attractive.”
The question of conflict resolution also plays an important role in the functions of the unit. Alva Niño explained they had received direct orders from the leader of the Ministry of Economy, Tatiana Clouthier, to intervene and accelerate all conflict resolution proceedings within the mining industry. These conflicts are generally related to labor and legal matters or to ESG factors, such as the relationships between mining operators and local communities. Alva Niño said the unit views local communities as central to the work of the mining sector. “The mining industry does not work alone. Community support will always be vital.”
In regards to the industry’s present state, Alva Niño emphasized the industry qualities that came to bear on its operations when the pandemic began in 2020. “Mining has been one of the central supports of Mexico’s economic recovery following the pandemic” after the industry was declared an essential economic activity and allowed to restart its activities in May 2020, right after the first COVID-19 cases were reported in Mexico. He noted that as many as 40,000 jobs have been created by the mining industry since then. Alva Niño also emphasized that by sustaining its mineral production throughout the pandemic, the mining industry played a role in sustaining many of Mexico’s other industries and their supply chains which depend on those minerals as basic raw materials and feedstocks.
In Alva Niño’s view, the mining industry’s handling of the pandemic, as well as the many additional processes that it burdened workers and operators with, demonstrated a unique capacity for adaptability and flexibility. “Centers of mining activity in Mexico’s mountainous regions became like bubbles of protection against COVID-19 contagions.” The industry’s isolated conditions allowed safety and hygiene protocols to be developed and supervised in a sophisticated way, which in turn led other industries to replicate the mining industry’s approach to managing working environments throughout the pandemic, said Alva Niño.
While these developments have been crucial to the industry’s present-day success and its contributions to Mexico’s economic welfare, Alva Niño emphasized that they would play an even larger role in the industry’s future. He also argued that the mining industry was about to play an even larger role in Mexico’s future given that “the mining industry will be a key pillar in the energy transition.” Alva Niño referenced the controversial language included in the recently proposed electricity reform that states that any mineral that could prove “crucial” to Mexico’s energy transition be considered as a “strategic resource” that could be nationalized at any time. While Alva Niño did not make any allusion to the political process surrounding this law or the implications of nationalizing any mineral, he did note that his unit was involved in the creation of this list of minerals. “This list has to be dynamic, not fixed; the minerals that could be classified as critical to the energy transition now might be irrelevant three to five years down the road because of the speed with which the energy industry is innovating its own technologies and processes.”.
Alva Niño explained that all future national endeavours could not be secured without increasing investment in mining exploration. In his view, additional incentives will be needed for investment in exploration activities to reach the levels that will satisfy the industry’s future needs. In his interview with MBN, Alva Niño also made clear that the conditions which were preventing more investment from entering the industry were in part related to the availability of information. “The lack of legislative certainty has kept investors on edge. The legislative situation in our country must be improved through the provision of more information.” Alva Niño believes that this kind of work can be done within the context of the government’s current policy to stop issuing new permits and concessions. As he stated at the time, “unfortunately, there is a presidential order to stop mining permits. However, and this is where we come in, while we understand that there will be no new mining permits for the time being, we are asking the government to allow us to work on the ones we already have. That is what we are working on, in addition to lithium explorations and tax reductions.” His outlook on the positive role that the unit can play in the industry’s future remains positive. “We understand mining is a core part of a country's development efforts. Our commitment is to communicate the benefits of mining and the high quality of the Mexican mining industry.”