Sonora: Key State for the Future of Mining in Mexico

Recent changes in regulation have put mining operations to the test in Mexico. The strong potential of the country, however, will help it to navigate these complications, agree experts. Sonora, in particular, stands out as one of Mexico’s leading mining hubs thanks to its exploration and production potential.

“Sonora is the mining state par excellence, with 36 percent of Mexico's total mining production. It has Hermosillo as the national mining capital in terms of supply,” said Jorge Aguirre, President, Mexican Chamber of the Construction Industry (CMIC) Sonora.

Sonora stands out as Mexico’s top producer of copper and gold. Although other states are coming closer, Sonora is still very much ahead in copper, producing over 80 percent of the total national output. Copper is a major factor in Sonora maintaining its leading position in the sector, added Aguirre.

Brodie Sutherland, CEO, Tocvan Ventures points out that Mexico ranks first in Latin America for exploration investment, first in global silver production and stands proudly among the top 10 gold producers. Sonora is also the top gold producer in Mexico, with 37 percent of the national yellow metal production volume. Moreover, the state is the host to two major mining projects: La Herradura and San Francisco.

More than 100,000 jobs in Sonora’s mining sector pay over 40 percent of the average salary. In total, 22 municipalities have mining as their main economic driver. The state boasts 71 active mining units, which means Sonora maintains the highest amount of ongoing mining operations in the country. Big companies like Grupo México have their biggest assets in Sonora and are looking to invest more in the state. This company, for example, is investing US$3.1 billion in Sonora for further mining activities, reported Mining Technology.

“The geological potential of the state is a differentiator and should be promoted and marketed in order to attract investment,” said Leonardo Taylor, Director of Mining, Sonora Government. Attracting investment, however, remains a challenge in this and other states as there is an exploration deficit that needs to be reactivated.

In Mexico, there are currently 36 lithium mining concessions financed and controlled by foreign companies. The biggest and most important one is located in Sonora and is currently owned by a Chinese corporation, said Andrew I. Rudman and Cecily Fasanella, Woodrow Wilson International Center for Scholars. Lithium has gained relevance due to the key role it will play in the energy transition and its importance for EV batteries. To bank on this new potential, in 2019 the British company Bacanora Lithium announced the launch of the Sonora Lithium project located in Bacadehuachi. Although Bacanora is a British company, the Chinese company Gangfeng Lithium owns 90 percent of the company’s shares.

Nevertheless, the recently-approved Mining Law Reform has created an uncertain environment for lithium. Under the new legislation, the mineral is now in the state’s hands. President López Obrador has already announced the creation of Litio para México, the state company that will be in charge of exploiting and commercializing the mineral, although he has said that existing lithium concessions will be maintained as long as they were requested specifically for lithium exploitation.

Sonora has received international attention for its recently uncovered lithium deposits and the policy changes regarding the mineral’s ownership. “Analyzing and studying lithium and the viability of projects to exploit the mineral has to be the focus now. We must work toward creating a new industry so that more jobs arrive to the country,” said Taylor.

Overall, experts agree that Sonora has world-class geological potential. The state has also cemented itself as a true mining employer, with many of its leaders having been shaped by the industry. The Sonora Mining Cluster plays a big role in promoting the integration and strengthening of managerial capacities for companies, brining important environmental and social issues to the table, said Fernando Estrada, Director General, Sonora Mining Cluster to MBN. “The cluster has a vision of integrating four helixes: investors, academia, the state and society, to cover the needs that can arise in any mining project,” he added. “The mining industry today needs capabilities that were previously not considered relevant to the sector,” said Estrada.