Overcoming Dips in the Sector

The fiscal reform, and especially the mining royalties, was announced at an extremely difficult time for the industry, says Octavio Alvídrez, CEO of Mexican silver giant, Fresnillo. “We were already working with the communities on infrastructure that served the surrounding areas, so this is part of the reason why the country has experienced a fall in the Fraser Institute investment attractiveness rankings to number 37,” he comments. He believes that compared to some other countries, Mexico is currently at a disadvantage. “If we were to change certain elements of the fiscal reform I am certain it would be beneficial and we would see investment in mining growing,” he claims. From 2012 until last year, Mexico saw a drop in mining exploration, and from 2014 to 2015 exploration levels fell by more than 30 percent from 2012 to 2015. “If Mexico implemented a system in which exploration, the future of mining, was promoted it would be an extremely positive development for the mining industry,” he clarifies. “We must work closer with the government and make it aware of the changes we can implement together to attract increased investment.”

The Energy Reform has opened new doors for mining companies that are now able to generate their own electricity supply, and Fresnillo has taken full advantage of this opportunity. “In terms of energy, we are not only examining the sourcing of energy at competitive rates but also the power source itself, and we are looking into clean energy sources,” he shares. “By mid-2016, I believe we will be able to commit ourselves to a certain percentage of clean energy generation.” Additionally, an important component for Fresnillo is diesel that is consumed in open pit mines. At the moment, Alvídrez shares the company is testing ways to replace this source with natural gas. The pilot program will involve running two Fresnillo trucks in La Herradura with natural gas and will start in the next few months. Depending on the results, Alvídrez plans to subsequently change the fuel used by Fresnillo’s entire fleet to natural gas.