Promoting Mining Investment Through Expert CommunicationBy Andrea Villar | Fri, 05/08/2020 - 11:27
Q: What is the objective of the Association of Miners in Sonora (AMSAC)?
A: The state of Sonora is Mexico’s mining leader. We are the leading producer of copper, graphite, anthracitic coal and the sole producer of molybdenum. In addition to producing 24 percent of the country's gold, the state is a major producer of silver, iron and nonmetallic minerals, such as barite, silicate, and zeolites.
The mining industry in Sonora generates more than 100,000 direct and indirect jobs and contributes 17 percent of the state's GDP. This figure rises to 25 percent when considering the contribution of the sector’s supply chain. To put that into perspective, 25 cents of every peso made in the state is generated by the mining sector. For that reason, it is important that state, municipalities and the federal government support the industry’s development and promote initiatives that favor the sector.
The Sonoran territory, the second-largest in Mexico, has more than 5,000 mining concessions across more than 43,000 square kilometers, or 23 percent of its land area. That is higher than the combined states of Queretaro, Aguascalientes, Colima Morelos, Tlaxcala, Hidalgo and Mexico City.
Our objective is to represent our members in official bodies to strengthen and develop the mining sector. We promote a better and closer relationship between our members and the federal, state and municipal authorities. The strategies to achieve this goal are developed in conjunction with the mining companies and the supply chain with which we work.
Q: What are the main concerns and needs of AMSAC members?
A: The mining sector has two issues: the uncertainty that is preventing or delaying investment in projects, and the negative perception of the industry in some quarters. Many people are unaware of the reality of the industry and its beneficial contributions to society. Instead, they think of it as an activity that is isolated from their daily life, when in fact, without mining they could not even communicate with someone on the phone.
This perception has somewhat changed over the years because mining companies are much more effective in communicating what they do and how they do it. In addition to transparency regarding their operations, companies working in Mexico disclose their environmental strategies, which meet international standards. An example is Buenavista del Cobre, a subsidiary of Grupo México, in Cananea. The company’s efforts to repopulate the Mexican gray wolf resulted in its removal from the endangered species classification. Grupo México, itself, grows more than 5 million plants every year in their nurseries in Sonora.
A great deal of work has been done to build fact-based bridges between the industry and the population. We endeavor to demonstrate the good work that mining companies do with communities, with the environment, and above all, the social wealth they develop in the areas where they operate. Another area of contention is the perception that mining companies do not pay enough taxes. In fact, this industry is among the country’s top taxpayers. Studies also have shown that wages in the mining sector are up to 40 percent higher than in other industries. Mining transforms the wealth of the land into social wealth.
AMSAC’s communication department designs strategies that ensure the message the industry wants to convey is transmitted correctly. In 2019, the Chamber of Mining in Mexico (Camimex) invited us to participate in drafting a communication plan so that the entire sector can stay on message and avoid contradictions.
Q: What is AMSAC’s view regarding the federal government's position on mining?
A: It is worrying that today there are fewer funds available to states and municipalities due to the government's budget cuts. This spurs the communities around the mines to increase taxes on the sector to recover that lost state and federal funding. An example in 2019 was a local deputy’s effort to replicate the environmental tax that had been approved in Zacatecas. According to the proposal, for each cubic meter of land, the government would charge MX$12 for the removal of tepetate (a geological horizon or volcanic rock). This is illogical because tepetate is a liability for us and the mining companies do not make profits on it. In Cananea, 1 million cubic meters are removed daily and that would mean MX$4 billion a year. If that tax had been approved, mining in Sonora would end. Fortunately, we all raised our voices and convinced the government that it would do great harm to the state.
On the other hand, in 2014, the tax deductibility scheme applied to the exploration stage was changed. This caused companies to stop exploring. People think that if someone has a concession, they can start removing gold the next day. In fact, the process requires a minimum of 10 years and many times, companies fail to reach the operational stage. There are 56 mines in operation in Sonora, of which 55 are in operation. We are a mining state and we should promote exploration and investment in the sector.
The Association of Miners in Sonora (AMSAC) contributes to the strengthening and development of the mining-metallurgical sector. It seeks the constant and effective improvement of participants through favorable regulations.