News Article

Will Francisco Quiroga’s Legacy Prevail?

By Alejandro Ehrenberg | Fri, 09/11/2020 - 14:57

As the dust settles in Mexico’s mining sector following the Undersecretariat of Mining’s termination last week, one of the main concerns among top industry players is whether vital communication channels will disappear and stakeholders will retreat into their respective silos. That would undo much of the progress achieved during Francisco Quiroga’s 20-month tenure as Undersecretary of Mining. However, the former undersecretary is confident that his legacy will remain.

The mining industry is not simply made up of companies extracting resources from the subsoil. Rather, the sector comprises a delicate ecosystem of suppliers, investors, governments, regulating agencies, security providers, mining communities, workers, unions, NGOs and international organizations. One of Quiroga’s main priorities was to promote dialogue among these groups, guided by the belief that the path to move forward must be treaded cooperatively if any lasting success is to be achieved.   

This dialogue-based strategy led to numerous successes. For instance, in May 2020, the Ministries of Economy and of Citizen Security and Protection inaugurated a roundtable for addressing mining’s vulnerability to organized crime. The objective was to establish channels of coordination between the government and the industry, with the ultimate aim of strengthening security schemes and effectively investigating crimes. This does not mean that the government has renounced its responsibility but that it will cooperate with companies to prevent crime. “The fact that there is a security table with a long-term vision is great news for the mining sector and an important response to what we expect from the post-pandemic world because organized crime will also change its strategies,” said Manelich Castilla, former Commissioner of the Federal Police, during a conference organized by Mexico Business Events.

Another example came at the onset of the COVID-19 outbreak. In late March, Mexico’s government decided to halt all non-essential activities to prevent contagions. That the mining industry, which represents roughly 2.6 million jobs and is key for the production of vital medical supplies, was not included among essential industries was befuddling. Industry players, including companies and unions, rallied behind Quiroga’s leadership to reverse the decision. After an intense lobbying campaign, based partly on the industry’s strong health protocols, mining was deemed essential to Mexico’s economy in June. “We reached out to all interested parties and got them to talk to each other and create unity of purpose. We defined the priority, developed an industry-wide health protocol, implemented it successfully and showed it to the health authorities to prove that our operations were safe,” Quiroga told Mexico Business News.

Moreover, the undersecretary’s collaborative leadership was fundamental in smoothing out long-standing social conflicts impacting the mining industry. In August, Newmont Corporation announced that all outstanding disputes between the company and the Cedros community had been resolved. The community was involved in a series of blockades halting Newmont’s Peñasquito polymetallic mine, one of Mexico’s largest operations. “We achieved a significant milestone and are pleased to bring months of negotiation with the Cedros community to a close. We look forward to sustainably operate in this region for decades to come. It is only through patient and transparent community engagement, combined with strong government support, that we have been able to reach a lasting solution that is beneficial to all stakeholders,” said Tom Palmer, Newmont’s President and CEO.

Now that Mexico's president has decided to terminate Quiroga’s role adducing austerity needs, the viability of achieving such results has been brought into question. “There has to be a counterpart at the federal level that matches the importance of the Mexican mining industry. It is true that competent people at the Ministry of Economy will remain in charge of mining. But the risk is that their place in the hierarchy will not allow them to pick up the phone and call a state governor. The undersecretary had established himself as a dialogue node and that will be hard to replace,” Gabino Fraga, Director General of Grupo GAP, told Mexico Business News. Fraga’s opinion is in a similar vein as that of Mexico’s Mining Chamber (CAMIMEX), which expressed its concern in a recent statement: “Mexico is a mining country and cannot afford to lose a role in the federal government that facilitates communication and action between the sector’s different entities.”

Correspondingly, John Darch, Chairman of Sonoro Gold Corp, a Canadian company developing the Cerro Caliche project in Sonora, commented to Mexico Business News that the gap left will need to be bridged in some way if Mexico’s industry is to “achieve its remarkable promise and fulfill its potential to contribute to the country’s prosperity.” Darch noted the importance of having a government ministry especially focused on mining, as is the case in Canada, Peru or Chile. “A good example of the sector’s immense growth potential is the 1,200km long Sierra Madre Occidental volcanic province where our projects are located. Despite hosting one of the world’s largest concentrations of precious metals, 90 percent of this area has yet to be explored,” he added.  

Quiroga’s departure will not be inconsequential. But the advantage of the type of collaborative, dialogue-based leadership he championed lies precisely in its capacity to survive specific personalities. The undersecretary’s legacy has to do with a cultural change in the way mining is managed in Mexico. In a conversation with Mexico Business News, Quiroga said that his approach was never meant to be personal. “At the Ministry of Economy there is a commitment to continuity. Our work at the Undersecretariat was consistently implemented through teams, which remain in existence. The basis for what is aimed at in the industry has been set and the teams will continue to work to bring the project of an inclusive, sustainable Mexican mining to fruition,” he elaborated.    

Given that Mexico’s federal government remains committed to mining, it is up to companies, unions, civil society and other industry stakeholders to come together and not fall into the old siege mentality. Rather, they must foster collaborative solutions that drive the industry forward. Jason Simpson, CEO of Orla Mining, which is developing the Camino Rojo project in Zacatecas, said to Mexico Business News that even when having a government department focused on the industry’s specific needs maximizes benefits for Mexico, he is certain the government will not neglect mining. “The government understands the important role the resource industry plays at the local, state and federal levels and may be simply trying organize its workload as efficiently as possible,” he added.

The world is entering a new precious metals bull market, and industrial recovery in China and Europe is pushing demand for base metals up. As investors turn their eyes to mining, the cultural shift initiated by former undersecretary Quiroga can become one of Mexico’s key added values as a mining jurisdiction.    

Alejandro Ehrenberg Alejandro Ehrenberg Journalist and Industry Analyst