Mexican mining chamber warns uncertainty to bring investment cuts

Sierra Metals

26/02/2021 18:45

By David Alire Garcia
    MEXICO CITY, Feb 26 (Reuters) - Mexico's large mining sector
will likely see some recovery this year after 2020's
pandemic-induced slump, but a key industry leader said he fears
rising political risk will drag down growth as companies focus
new investments elsewhere.
    Fernando Alanis, president of Mexican mining chamber
Camimex, said in an interview that growing doubts on government
polices like permitting and concessions will lead to at least a
dozen companies to shift new investments to more inviting
countries like Peru and Chile this year.
    "In 2021, I think we're beginning to see other (negative)
factors that have nothing to do with COVID," he said late on
Thursday, specifically citing investor uncertainty.
    Around a dozen companies, he said, "are saying that they're
going to make their next investments elsewhere" as Mexico's
regulatory and tax issues have made it less attractive than the
South American mining hubs.
    Trade publications have recently reported that firms with
significant Mexican projects including Argonaut Gold Inc
 AR.TO , Excellon Resources Inc  EXN.TO  and Sierra Metals Inc
 SMT.TO  are likely looking outside the country to foster new
growth.
    Mexico is the world's biggest silver producer, responsible
for nearly a quarter of global output, as well as a top ten
producer of both gold and copper.
    Alanis, who until earlier this year was the long-time chief
executive officer of Industrias Peñoles  PEOLES.MX , said he
expects investment in Mexican mining this year to remain at 2020
levels of about $2.8 billion, even though the sector was
completely shut down for two months last year due to pandemic
restrictions.
    He said the value of the sector's output this year will
likely reach 2019 levels, or about $11.9 billion, boosted by
higher prices.
    Alanis praised signals coming from Mexico's new economy
minister, Tatiana Clouthier, who oversees mining and with whom
he earlier this month initiated talks aimed at boosting mining
activity. But he sharply criticized her boss, President Andres
Manuel Lopez Obrador, who he says has painted a false picture of
the sector.
    Alanis pointed to the president's claim that upwards of 80%
of Mexican land has been given away in mining concessions, many
to foreign firms, while the government's own data shows that
only about 9% of land is covered, with only about a quarter of
that in operation.
    Lopez Obrador's two-year-old government has also rejected
project permits and halted new concessions, and the ruling
party's head of the Senate economy committee recently proposed
the nationalization of the country's nascent lithium industry,
which Alanis said is unlikely to pass but nevertheless
represents a "terrible precedent."
    Alanis stressed that new concessions are needed to revert a
decline in exploring for new commercial-grade deposits, and said
Clouthier is open to the idea.
    "If new concessions aren't awarded, there's no exploration,
and if there's no exploration, the future of mining is simply in
doubt," he said.
    He said talks with Clouthier, along with senior tax and
environment ministry officials, are set to resume next week.

 (Reporting by David Alire Garcia; Editing by Christian Plumb
and Marguerita Choy)
 ((david.aliregarcia@thomsonreuters.com; +52 55 5282 7151;
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