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Mexico relies on imported aluminum

August 1, 2019
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Why this is important to Wisconsin businesses: A lack of domestic bauxite mines means Mexico can’t make enough aluminum domestically to meet demand.

Aluminum is the world’s second-most-used industrial metal, second only to steel. Mexico’s long-running mining tradition dates back to colonial times, and despite the historically large (and continuing) importance of the mining industry and the fact that Mexico leads in the production of several metals and minerals (it is among the world’s top 10 producers of silver, gold, lead, molybdenum, zinc, selenium, copper, barite, cadmium etc.), aluminum production in the country is scarce. In fact, the country doesn’t even make the top 30 world producers of aluminum, since bauxite mines in Mexico are few.

As a result, primary production of aluminum in Mexico is negligible (with no exploring or discovery of new bauxite or aluminum mines in decades) and the country relies on imports, as well as a strong industry of secondary production and active efforts in aluminum recycling (from the automotive and construction industries and from the beverage industry) to meet domestic demand. The aluminum industry in Mexico employs 122 workers and contributes a mere 0.04% of the national GDP and only 0.1% of the industrial GDP. According to INEGI (the National Institute of Statistics), the aluminum industry runs at 77% capacity, while overall industry runs at 80% on average.

Production of aluminum in Mexico has grown at a rate of 25% for the past five years, registering a record of 645,000 metric tons during 2018. Of this total production, aluminum ingots made up 60.2% and aluminum profiles 32.2%, leaving other products with only marginal shares: aluminum foil stands at only 1.3% and aluminum laminated products at 6.4% of total production. These figures have been constant with little variation during the last five years.

Given this, Mexico imports huge amounts of aluminum. As of 2017, these imports totaled $2.54 billion, the largest of any mining product—including precious metals, industrial metals and minerals. To put aluminum imports in perspective, there are few comparisons that offer a better perspective on their dimension:

  • Aluminum imports constitute 30.5% of all metals (including precious and industrial) and minerals imported into Mexico, estimated at a grand total of $8.33 billion in 2017.
  • Aluminum imports alone exceed imports of all non-metallic minerals—valued at $2.45 billion, and eight times larger than imports of precious metals (gold, silver and platinum), valued at $318 million.
  • Aluminum imports are twice as large as the second-most-imported-mining product—steel—imports of which totaled $1.22 billion in 2017.

Exports of aluminum are much less significant, amount to only $929.5 million during 2017, or only 5.3% of Mexico’s total exports of metals and minerals. Many other metals registered much larger exports than aluminum, such as gold (five times larger), silver (three times larger), copper (three times larger), lead (two times larger) and zinc (1.5 times larger) during the same period.

In short, Mexico suffers a chronic deficit of aluminum due to low bauxite mine activity and has to rely heavily on imports, creating large opportunities to all aluminum products, especially those used in the automotive and construction industries. In March of 2018, the current U.S. administration imposed a 25% tariff on all steel imports and 10% tariff on all aluminum imports coming from Mexico and Canada. However, further negotiations lifted these tariffs a year later, removing obstacles to aluminum exports from Mexico since the U.S. is the major destination of such exports.

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