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Mexico’s mining industry remains a pillar of the economy

July 1, 2019
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Why this is important to Wisconsin businesses: A recent boom in production and increase in the value of metals and precious metals have attracted foreign players to the market.

Mexico’s mining industry has a long history and has always been one of the pillars of the country’s economy. Since the Spanish colonial days (16th to the 19th century), mining has been the preponderant generator of wealth. Independent and industrialized Mexico saw the emergence of other important industries, such as energy, automotive, construction and tourism—yet mining has remained one of the most important industries. As of 2017, mining accounted for 3.3% of total Mexican GDP and up to 8.3% of industrial GDP. Mining is also the third-largest foreign currency source. In 2017, the mining sector increased by 4.8% in terms of value compared to the previous year.

Traditionally, mining has been an activity predominantly carried out by states in the north area of the country, and to a lesser extent in central Mexico. Of 32 states, 25 have mining activity, and only four of these are southern states. The top five mining production states, all in the north (Sonora, Chihuahua, Durango, Zacatecas and Coahuila), accounted for nearly 80% of the total production value of mining during 2017.

As expected, this industry is an important source of employment. As of 2017, it was estimated that direct employment accounted for 371,560, workers but figures for direct and indirect employment boost the total to 2.2 million. The large increase in the value of Mexican mining production has a number of reasons: devaluation of the Mexican currency (considering a large portion of the production is exported); the increase in price of some products, especially precious metals (gold and silver); enhanced mining and production methods; and larger investments from domestic and international companies. Gold, copper, basalt and silver were the most valuable Mexican mining products of 2017, making up to 57% of the total value.

This recent boom in production and increase in the value of metals and precious metals has attracted international actors to participate in the Mexican mining industry. As of 2017, there were 290 foreign companies operating in the country, most of them Canadian. Canadian companies (such as Advance Gold Corp., Alianza Minerals Ltd., Canuc Resources Corp., Del Toro Silver Corp., Equinox Gold Corp., Fortune Bay Corp., GoldCorp Inc. and MAG Silver Corp.) make up nearly two-thirds of all foreign players in Mexico’s mining industry.

In the case of gold, this precious metal has gained paramount importance in the mining industry. In 2017, 101,000 kilos were produced, 13.6% less than the previous year since the value decreased by 11.8%. However, these figures are not bad, considering that the record peak production was a little over 120,000 kilos, achieved in 2015.

In the case of the other important precious metal, silver, Mexico is the leading producer in the world, with 4,000 metric tons as of 2017, 2.7% less than the previous year, yet far from the production peak of nearly 5,000 metric tons achieved a few years earlier.

In the case of copper, Mexico produced 463,400 metric tons in 2017, close to the peak production of nearly 500,000 metric tons achieved a few years earlier. The value of copper rose by 20.6% year-over-year due to international prices increasing.

Finally, in the case of zinc, Mexico had a great year in 2017, since production rose by 4.5%, reaching 401,000 metric tons; however, production value jumped by 43.6% due to the spoke in the value of zinc in international markets.

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