Nearshoring Requires a Strong Mining Sector: Expert
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Nearshoring Requires a Strong Mining Sector: Expert

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Fernando Mares By Fernando Mares | Journalist and Industry Analyst - Wed, 12/28/2022 - 12:48

Nearshoring opportunities are forecasted to benefit specific industries as companies look for industrial spaces, which are reaching zero availability. In this context, some experts consider that the mining industry is key and must be strengthened to ensure other industrial sectors benefit from this phenomenon, as it is the first link in many industrial value chains. 

According to José de La Cruz, Director, Institute for Industrial Development and Economic Growth (IDIC), the relocation of the supply chain will benefit the Mexican economy. However, the country needs a robust mining sector to ensure these benefits will materialize. A stronger sector would be more resilient to the changes in the commodities market, which is mainly impacted by external factors. “Counting on domestic strength makes it possible to face any scenario of rising and falling prices,” de La Cruz said in an interview with BNAmericas. 

De La Cruz forecasts that the prices of some minerals and metals will generate pressures for the industry in 2023 and 2024, which makes it more important to strengthen the mining sector to avoid importing expensive raw materials and to take advantage of nearshoring opportunities. 
Lacking investment has recently led to a downward trend for the industry. According to the Mexican Mining Chamber (CAMIMEX), Mexico’s foreign direct investment (FDI) in the mining sector fell 55.9 percent year-on-year in the first nine months of 2022. 

According to de La Cruz, the mining sector will grow only 0.9 percent in 2022 and 1.8 percent in 2023. He added that the private sector and the government need to resolve the tensions that have been increasing during 2022 to counter this scenario. On Dec. 9, 2022, MBN reported that Minister of Economy Raquel Buenrostro accused the mining sector of corruption, saying that the government halted concessions because previous administrations granted concessions to companies that did not comply with the legal framework. Buenrostro also accused the sector of not paying enough taxes. This is the last and the most direct pronunciation of the federal government toward the mining industry. 

Still, the Mexican mining sector has also been considered by the US government as an essential supplier for the region's value chain, which could be boosted by nearshoring. In 2020, the US Department of Defense identified 58 strategic minerals that the country must import and Mexico is among the three main suppliers of 14 of these minerals, including copper, lead, gold and fluorspar.
 

Photo by:   Leon Overweel

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