Changes to ethanol NOM prompt fuel market debate

Corn squeezins
Corn squeezins

Mexico’s Energy Regulatory Commission (CRE) published modifications to the country’s fuel quality standard, NOM-016-CRE-2016, on June 26, 2017, stoking an ongoing kerfuffle among parties on either side of the ethanol-as-fuel debate.  Beyond the philosophical grandstanding, the changes to the reg have potential to impact the evolution of the fuel industry in Mexico and as is often the case, they are generating no small amount of confusion.

Over the past 10 years, national oil company Petróleos Mexicanos (Pemex) has repeatedly announced its intention to introduce gasoline containing ethanol into the Mexican market, only to suspend the effort for one reason or another each time, most recently in 2015.  The standard permitting up to 5.8% ethanol as an oxygenate in gasoline has been on the books since August 2016, yet as best we can determine, gasoline currently sold in Mexico is oxygenated with MTBE rather than ethanol.  The recent modifications to the fuel standard include an increase in the maximum allowable percentage of ethanol in gasoline from 5.8% to 10%, clearing the way for the introduction of so-called E10 fuel.  The move comes within the context of Mexico’s energy industry reform, which allows for private production, importation and sale of fuels as well as the elimination of government establishment of fuel prices.  The elimination of gas price controls at the pump is currently being implemented by region, to culminate in nationwide free market pricing as of January 1, 2018. Continue reading Changes to ethanol NOM prompt fuel market debate

Recent and upcoming investment in Mexico

Information collected from media reports over the last month:

  • Chemicals: U.S. chemical firm The Chemours Company initiated construction on a new production plant in the northern state of Durango, the company reported. The US$150 million facility is planned to produce solid sodium cyanide for the Mexican mining industry. (The Chemours Company, June 26, 2017)
  • Commercial real estate: Mexican real estate developers Fibra Shop and Grupo Frel will team up to expand existing retail complexes in the coastal tourist locations of Cancun and Los Cabos at a cost of approximately US$111 million, the companies reported. The expansions will incorporate the companies’ “Espacio Latino” marketing concept, which highlights Mexican culture, folklore, gastronomy and design into the shopping mall environment. (El Financiero, June 30, 2017)
  • Gas stations: Mexican gas station operator Grupo Lodemo reported plans to invest approximately US$5.6 million to convert 16 of its stations from the government-owned Pemex brand to the company’s own La Gas brand. Lodemo seeks to close the year with 50 locations in operation under the La Gas brand in the southeastern state of Yucatan. (El Financiero, June 29, 2017)
  • Electronics: French automation technology multinational Schneider Electric reported plans to invest US$10 million in manufacturing operations in the northwest state of Baja California. Resources will support production of thermal magnetic circuit breakers. (El Economista, June 21, 2017)
  • Aerospace: U.S. aerospace composites and textiles manufacturer Albany International plans approximately US$14 million of investment in the central state of Querétaro, the state government reported from the Paris Air Show. The resources are expected to support composite manufacturing operations in the state. (AM de Querétaro, June 20, 2017) Continue reading Recent and upcoming investment in Mexico

Recent and upcoming investment in Mexico

Information collected from media reports over the last month:

  • Amusement parks: U.S.-based amusement park operator Six Flags Entertainment Corp. inaugurated its remodeled water park in the central state of Morelos at a cost of US$18 million, the company reported. Six Flags plans to add hotel facilities and restaurants at the site in the future. (El Financiero, May 31, 2017)
  • Real estate development: Mexican developer Gicsa reported it will invest approximately US$34 million to convert an existing Mexico City shopping center into a mixed-use complex. The repurposed site is planned to include offices, retail space and a hotel. (El Financiero, May 30, 2017)
  • Casual dining: Mexican restaurant chain Toks, part of the Gigante corporate group, is projecting investment of up to US$48 million across its formats. Projects include a new distribution center, remodeling of the Beer Factory and California format casual dining restaurants and a beer bottling operation. (Reforma, May 30, 2017)
  • Cement: Mexican cement producer Elementia is currently carrying out a US$250 million expansion of its production plant in the central state of Hidalgo, the company reported. The upgrade will increase Elementia’s annual cement production capacity in Mexico to 3.5 million tons. (El Financiero, May 29, 2017)
  • Beverage: British drinks multinational Diageo initiated construction of a bottling line for tequila and vodka at its processing plant in the western state of Jalisco, the company reported. The bottling expansion is part of US$400 million in investment planned through 2020. (El Financiero, May 24, 2017) Continue reading Recent and upcoming investment in Mexico