Analysis by BMI Research predicts that Mexico’s mining industry will experience one of the fastest recoveries in Latin America due to the strong price performance of its key commodities – gold, silver, copper and zinc – along with a steady project pipeline and supportive regulatory framework. Heidi Vella profiles Mexico’s mining sector and its prospects for 2018 and beyond.
Mexico is a prime mining destination, with a 500-year history of exploration and production. With the country’s abundant resources of gold, silver, zinc, copper and iron, along with a stable government and attractive financial market, interest is once again peaking.
Last September, the Mexican Government published a report estimating a nearly 50% year-on-year increase in mining investment to $5.5bn in 2017.
Furthermore, for the second year in a row, BMI Research says the Central American nation will see one of the strongest recoveries regionally, due to a solid pipeline of projects, competitive operating costs, supportive government policies and rising metal prices.
Already, Mexico’s mines produce 1.7% of the world’s output of mineral ores and the country is the largest producer of silver globally.
In 2015, a report by the Mexican Mining Chamber of Mexico stated the target minerals in Mexico as gold (34.1 %), silver (18.5 %), lead (2.8 %), copper (19.7 %) coal (1.6 %), zinc (6.5 %) and iron (4.6 %).
But it is growing demand for zinc and copper that promises to boost Mexico’s mining sector going forward.
Strong mineral portfolio
BMI analysts expect prices for Mexico’s key domestic commodities to perform well until at least 2020, creating good signals for investment in the country.
In particular, the firm predicts that zinc and copper will remain outperformers due to a demand-driven deficit for copper and a deficit due to supply restraints for zinc. The company is also positive for Mexico’s largest mineral sector, precious metals, but slightly less bullish for gold.
Aside from rising commodity prices, Mexico’s project and competitive operating costs will drive growth, says Molly Shutt, a commodities analyst at BMI Research.
“Notably, Mexico’s top domestic miners increased spending in 2017, while most miners in the region, and globally, were still cutting back.”
This includes both junior and senior miners developing projects in the country, with most juniors in the precious metals sector and larger firms active in copper or base metals.
Some significant projects are set to ramp-up over the coming years, across the copper, precious metals, zinc and lead sectors, as well as highly sought-after lithium.