Lack of incentives for Mexican mining jeopardizes US11bn investments, claims Camimex

The absence of a public policy to promote the development of mining in Mexico jeopardizes an estimated US$11bn in investments that companies in the industry could make in the next two years, according to the director general of Mexican mining chamber Camimex, Karen Flores.

If the necessary conditions were in place, Camimex-affiliated companies could create more than 300,000 permanent direct and indirect jobs, as well as increase their annual tax contributions through income tax and payments for mining rights, Flores said at the XXXV international mining convention in Acapulco.

However, she underscored that Mexico sipped three places in the Fraser Institute’s Investment Attractiveness Index last year, making it the ninth most appealing mining jurisdiction in Latin America.

That drop was due to factors such as the current regulatory framework, the high tax burden, Mexico’s high crime rates and the uncertainty to which companies in this industry are subject.

In 2022, the mining industry generated more than 417,000 jobs, while its contributions to the national treasury totaled 72.9bn pesos (US$4bn), up 13.8% compared with 2021, mainly due to the increase in international metals prices and higher production due to the recovery after the COVID-19 restrictions.

The reform to mining legislation in May this year, which reduced the duration of the concessions to a maximum of 80 years from the previous 100 years and established the parameters under which they can be awarded, as well as reserving exploration for the Mexican geological service (SGM), threatening this essential activity and potentially endangering the future of mining in the country and Mexico’s position as a supplier of key minerals for the energy transition.

Between 2014 and 2022, the amount of investments allocated to exploration in Mexico declined by a third to US$572mn per year from US$856mn, according to official data produced by Camimex.

“If there is no exploration, there are no new discoveries and there will be no more mines, which reduces taxes and revenues for the country, as well as jobs in the regions where these companies are present, which also has an impact on the social fabric,” Flores said.