Supplier Development to Offset Lack of Exploration

Q: How do mining opportunities in Chihuahua compare to opportunities in other mining states?

A: Chihuahua’s geological potential continues to be very important. One of our main advantages is the Sierra Madre Occidental that runs through our state, providing a number of exciting mining plays. Unlike other states, such as Sonora and Zacatecas, there is still a great deal of exploration to be done. This leads people to assume that there is less geological richness here but we only need the exploration investment to solidify our knowledge. Unfortunately, the fiscal conditions at a federal level in Mexico do not incentivize this exploration work. Chihuahua is Mexico’s largest state by land area, totaling 27,745,500ha, of which 8.33 percent is held under mining concessions. This means that a little under 92 percent of our state’s territory remains unexplored. Of the land that is under mining concessions, only 0.12 percent of the state’s total area is being exploited, equivalent to 29,000ha. In this sense, our potential is unparalleled, as well as our need for further exploration. Mexico is suffering from a dearth of mining exploration and the impact of this will be felt in the medium term.

Q: What are some of the cluster’s main objectives in terms of its communications with public authorities?

A: No industry can thrive under the type of fiscal conditions that are being imposed on Mexico’s mining industry – we need to continue arguing in favor of a change in this matter. We maintain close ties with Chihuahua’s municipal and state governments and with the federal government. We want to generate incentives and better conditions that promote exploration in the state. We want to use these networks to help companies that are new to the state find their footing. We want to help them manage their ESG and security issues – our statewide expertise can help make their social engagement much more effective. Unfortunately, we are still very limited by the industry’s fiscal landscape, so we are forced to wait for a better moment to further accelerate our activities. We have tried to educate deputies and senators at the state and federal level about our industry’s needs but the federal government appears to be unresponsive to our petitions.

Q: What role is the cluster playing in the development of Chihuahua’s local suppliers and service providers?

A: We have done a great deal of work in the development of supply chains. Our cluster has to consolidate Chihuahua’s mining supplier network. To increase our investment and development of mining suppliers, we have also formed strategic alliances with embassies and consulates of countries that have strong mining industries, such as Chile, Peru, Australia, Canada and the US. We also have a commercial office in Arizona. We want to promote partnerships between foreign companies and Chihuahua’s suppliers and generate greater local economic activity and statewide tax revenue. Many of these foreign companies had plans to enter the state on their own, do their work and leave. Through our work, they can establish a mutually beneficial arrangement for the state and for local suppliers during their time here.     

Toward the end of 2021, we hosted our annual Business Gathering, which has grown to be quite an important event. We bring together all of the state’s mining operators and we arrange for them to sit face-to-face in B2B meetings with local suppliers. Over 495 meetings were set up, which represented a 20 percent increase compared to the previous year. Over 150 suppliers participated, along with the state’s 16 major mining projects, and over 300 people attended. We are studying the economic impact of this activity and we are expecting to obtain great results. In 2019, this same event generated over US$14 million. We are hoping that this year´s results can equal or even surpass that. This figure would allow us to consolidate and promote this event as one of the industry’s most important at a national level.     

The Chihuahua Mining Cluster (CLUMIN) was created in 2013 to support the main mining units in the state. Its goals are to foster the development of local suppliers and attract more mining investment to Chihuahua.