MINING IN MEXICO S - ProMéxico

20 Negocios i The Lifestyle photo courtesy of industrias peñoles
Historical Player
Industrias Peñoles began
operations as a mining company in
1887 and is now one of the largest
mining producers in Mexico. Its
exports, mainly to the US and Japan,
account for nearly two-thirds of the
company’s sales.
Part of Mexican Corporate
Grupo Bal, Peñoles is the world’s
leading producer of refined silver,
metallic bismuth and sodium sulfat
and is among the major Latin
American producers of refined
gold, lead and zinc.
The company owns and operates
several mines throughout Mexico
and is involved in several mining
joint ventures as well as mining
exploration projects in Peru.
Among its main mining assets in
Mexico are La Herradura –Mexico’s
largest gold mine–, La Ciénega —the
country’s richest gold mine–, Naica
–the largest lead producing mine in
México– and Francisco I. Madero –
the country’s largest zinc mine.
The company also operates the
largest non-ferrous metallurgical
complex (Met-Mex Peñoles) in Latin
America, and the fourth largest in
the world in terms of production
value.
Peñoles has substantial silver
and gold mining interests through
majority-held, publicly traded
subsidiary Fresnillo, which it spun
off in 2008.
Fresnillo mine has been
operating almost continuously
since 1550. It is the largest and
richest silver mine in the world and
produces about 30 million ounces of
silver per year, approximately 5% of
the total world production of silver.
Jaime Lomelín, Chief Executive
Officer of Fresnillo PLC,
summarizes the future plans for
the mine: “We intend to maintain
our position as the world’s largest
primary silver producer with the
aim of doubling production on
a silver equivalent ounce basis
by 2018 and equally increasing
our gold production.” That is
increase Fresnillo’s production up
to 65 million ounces of silver and
400,000 ounces of gold over the
next eight years.
Meanwhile, Peñoles remains
as the most important mining
company in Mexico. A historical
player in the industry, engaged in
exploring valuable deposits of nonferrous
metals in Mexico and Latin
America and profiting from one of
the longest mining traditions in the
world.
ity. Two years ago Mexico ranked as the best
location for exploration in terms of the country’s
investment risk for mining.
García de Quevedo, previously chairman
of the Mining Chamber of Mexico, draws attention
to the competitive advantages of a
country “with a very strong mining tradition.
Over the years, Mexico has developed genuine
expertise in mining, with great technical
and growth potential.”
But there are other factors too, such as
Mexico’s “total openness to foreign investment,
that encourages any company from around the
world to come and explore Mexico,” adds García
de Quevedo. Here he mentions that mining
attracted almost 17% of all foreign direct investment
in Mexico in 2009. This only accounts for
the metallic and non-metallic segments, without
including the iron and steel, cement and
glass industries.
The importance and cost of the workforce
are just as important, and highly competitive
internationally, as well as productivity, which
has increased significantly in recent years.
Government Support
Trading partners trust in Mexico and its industry’s
capacity to respond to global demand for
large-scale production and this is reflected in
Mexico’s leading role in key market segments
of the mining industry.
The country is the second largest producer
of silver, bismuth and fluorite; the third of celestite;
the fourth of wollastonite and diatomite; the
fifth of lead; the sixth of cadmium and molybdenum;
the seventh of zinc, salt and graphite; the
eighth of manganese and baryte and the twelfth
of feldspar, gold and copper.
These rankings not only reflect Mexico’s
competitive advantages but they also speak
volumes about other essential aspects of mining
- the country’s infrastructure to ease foreign
trade transactions, using road, highway, railway
or shipping networks, and the straightforward
mechanisms for companies to avoid doubletaxation
and to exchange information on supply
and demand. The Behre Dolbear report, published
in 2010, places Mexico in the first place
among 25 countries due to its fiscal regime.
Today’s Outlook
Due to these advantages, although not entirely
immune to the effects of the global economic
recession in 2009, Mexico’s mining industry
showed signs of robustness and even growth.
Figures from the Ministry of Economy
show that in 2009 private investment in the
mining and metal industries increased to 2.73
billion usd, adding up to a total of 8.54 billion
usd injected into the sector between 2007 and