Buried treasure
Despite a mopey world economy that just can’t seem to snap out of it, Mexico’s mining industry looks to be headed for another banner year in 2011. The Mexican Mining Chamber (Camimex) reported a record high of US$13.9 billion in production value for 2010, leading the sector to outstrip tourism among the country’s leading industries. The current year is expected to exceed last year’s performance, with growth through the first half set at over 17% and still on pace through August, according to the National Statistics Institute (INEGI). High demand for precious metals and certain industrial minerals has in turn led to a flurry of investment that should keep production strong for the foreseeable future. Camimex is projecting total mining sector investment of US$4.7 billion for 2011, which would represent a healthy 42% increase from 2010 levels.
While a number of extractive products are performing strongly, gold may well be the star of the show. With jitters over European debt and an unstable dollar sending investors scrambling, demand for gold on world markets sent prices soaring through the summer of 2011. Gold producers in Mexico moved quickly to increase output, resulting in a 41% increase in production in 2010 over the previous year and further growth of 14% through the first half of 2011. Since 2005, Mexican gold production by weight has increased by a torrid 139%, according to INEGI figures. While still not among the world’s top producers, Mexico has advanced several positions in recent years and Camimex is now claiming 11th place for Mexico in world gold production.
Other key metals have contributed to Mexico’s mining boom as well. Rising copper prices from 2009 through 2011 coincided with increased production to drive revenues and profits for Mexican copper producers. Copper output through the first half of 2011 was 60% ahead of last year, according to INEGI. Mexico regained the lead in world silver production in 2010 with production of 128 million ounces, according to the Silver Institute, with strong prices driving the development of new production sites.
In addition to splashy metals such as gold and silver, lesser known elements with important industrial applications such as fluorite, bismuth and molybdenum are quietly driving revenue growth for both domestic and foreign mining concerns in Mexico. Fluorite in particular has been instrumental in the vertiginous growth of chemicals and plastics multinational Mexichem. Mexico City-based Mexichem operates what they claim to be the largest single fluorite mine in the world in the northeastern state of San Luis Potosí, helping make Mexico the second largest producer of the mineral after China. Across its range of products, Mexichem operates 95 production plants in 19 countries, and reportedly plans to launch new plants in Japan and Korea by the end of 2012.
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