Mexico is a part of Central America with the United States of America to the north and Guatemala to the south. The total area of the country is 1,964,375 km2, and it has a population of 125,959,205 as of July 2018. The country’s climate varies from tropical to desert.
Mexico’s economy was affected during the 2008-2009 global downturn; however, the country has recovered in the last decade with its GDP progressing every year to $2.628 trillion in 2019, which makes it the 11th largest economy in the world. Since 2013, GDP growth has averaged 2% annually. The country has a free market economic policy and belongs to the trillion-dollar class.
Mexico is a country with abundant natural resources such as gold, silver, copper, lead, zinc, natural gas, and petroleum. The mineral industry of Mexico is an economically profitable sector and a major revenue generator for the government. The sector contributes 8.3% to Mexico’s industrial GDP and 2.5% to the national GDP. 379,000 direct and almost 2 million indirect jobs are generated by the industry.
Mexico’s main export partner is the United States, at 79.9% of the total Mexican export market. Minerals (including crude petroleum) and metals comprise approximately 10.5% of this large nation’s total exports.
Overview of Resources
The major oil-producing regions of Mexico are located in the eastern and southern regions of the country while gold, silver, copper, and zinc can be found in the northern and western regions of the country. Mexico was the leading producer of silver in the world in 2018, producing 6,100 Mt. Fresnillo, the world’s largest silver company, set records in 2018 when silver output rose 5.3% compared to 2017.
Mexico is also a major producer of fluorspar, lead, molybdenum, crude oil, bismuth, cadmium, salt, manganese, zinc, copper ore, gold, and iron ore.
Major mining companies which operate in Mexico include:
- Grupo Mexico, the third largest copper mining company in the world
- Minera Frisco
- Goldcorp Inc.
- Newmont
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The map of Mexico. Image Credit: CIA Factbook
Metals
Mexico is metal rich. Companies including Newmont, Fresnillo PLC, Alamos Gold and Agnico Eagle currently produce over 100,000 tons of gold annually. 6,100 tons of silver was produced in Mexico in
2018. Copper production is 3% of the world total. In total, Mexico is the ninth-largest producer of gold and seventh-largest producer of copper globally.
Newmont recently acquired a large gold mine in Mexico.
Industrial Minerals
Mexico is one of the top 10 industrial mineral producers in the world. Three minerals it produces are graphite, fluorspar, and strontium, which are critical minerals for the U.S. As for fluorspar, Mexico has 32,000 calculated tons of reserves, and it is the second largest producer of this mineral in the world. Graphite reserves are calculated to be 3,100 tons. Mexico produced 56,500 tons of strontium in 2016 and exported 55% of their strontium to the U.S. in that year.
Fossil Fuels
Mexico’s coal production in 2018 amounted to 7.71 Mt, compared to 7.362 Mt in 2017 and was significantly more than Brazil’s 1.174Mt. Carbonifera San Patricio S.A. de C.V., GAN, Grupo México, and Materiales Industrializados S.A. de C.V. (Minsa) are the two major companies dealing with coal production.
Oil production decreased from 2.2 million barrels in 2017 to 2 million barrels in 2018, due to declining petroleum reserves and lack of exploration activities, investment, and development of new projects. Pemex recently announced decisions to reverse the 15-year decline in oil output, aiming to increase investment in the coming years.
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Excavated Maya walls at Chacchoben. Credit: CIA Factbook
Investment
Mexico is the fourth-largest recipient of foreign direct investment (FDI) for mining in the world and the second in Latin America. Mining accounted for $1.4 billion of FDI inflow, from a total of $32.7 billion. A small percentage is invested in exploration of resources. The main investments were made by Canada (which owns the majority of mining operations in the country) the US, Germany, Spain, and Japan.
There are very few barriers to foreign investment in the mining industry in Mexico. NAFTA, the North American Free Trade Agreement, made it easy for U.S. suppliers to sell in Mexico, and with the ratification of the USMCA this is not predicted to change.
Criminal activity is particularly problematic in Mexico, which requires heavy security investment for companies operating in the country. This includes robbery and hijacking. Before visiting mining locations, foreign companies and investors should notify local, state and municipal authorities as well as local industry representatives of their intention and nature of work. Corruption in the public sector is also a long-running problem in Mexico but the government continues to implement measures to fight it.
To further attract foreign and domestic investment, the government has allowed 100% equity and private ownership for mineral exploration, development and production. The National Mining Development Plan is another measure taken by the government to allow private companies to mine minerals in the country.
Thanks to efforts undertaken by the Mexican government and the vast natural resource reserves, the country’s mining industry is expected to grow stronger in the coming years.
Disclaimer: The Author of this article does not imply any investment recommendation and some content is speculative in nature. The Author is not affiliated in any way with any companies mentioned and all statistical information is publically available.
Sources and Further Reading
This article was updated on 27th February, 2020.
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