Mining

The Mexican Mining Sector

Mexico is a country with a long mining tradition and it is still a leading producer of various mining products. Silver is the nation’s signature mineral (14% of share of world product) but Mexico also has an important source of copper, bismuth, cadmium, fluorspar and zinc on a global scale. Yet, today, non-energy mining plays a small role in the economy, but the GDP share has rebounded in recent years as shown on graph 1. There is a very high potential in the Mexican mining sector.

The greatest growth in output has been concentrated in gravel and sand, non-ferrous metals and other, non-metallic minerals (such as sulfur, salt and fluorite). Copper is the most important mining product in terms of value, with a total production worth of US$ 2.2 billion in 2006. It is followed by zinc, with total output in 2006 valued at US$ 1.4 billion. Silver production was worth US$900 million; gold output was valued at US$700 million. The other important mining products were coal, coke and iron ore.

INVESTMENT AND RESERVES

Investment in mining has risen dramatically over the past few years due to high mineral prices, jumping from a low of US$258 million in 2002 to US$ 1,257 million in 2006. Of that total, US$ 175 million were destined for exploration (6% of the world total for that purpose). Mexico does have a promising profile in copper, silver and gold, among others.

The Mexican Constitution stipulates that minerals are national patrimony, giving the government a major role in mining. Though, the current Mining Law allows full private participation in exploration and production with no restrictions on foreign investment. This opens a large channel for business opportunities.

A VERY COMPETITIVE MINING POTENTIAL

According to the Fraser Institute’s Annual Survey of Mining Policy Potential, measuring the impact of government policy on mining activity, Mexico has 64 points out of 100. This score is the same as Chile’s and higher than many states and provinces in the U.S. and Canada. In the Mineral Potential Index, which combines the current policy environment with pure mineral potential, Mexico ranked 20th out of 65 participant jurisdictions. However, this index has registered high volatility, as the previous year Mexico ranked eight.