The Mexican mining industry is rich in resources and history. Its history goes back more than 500 years, making it one of the most long-standing successful industrial sectors for foreign investors. The industry experienced investment growth of 14.7% in 2017 and 22% in 2018. In 2018, Mexico’s mining sector had the highest number of exploration projects per square kilometer in Latin America.
Mexico is one of the economies that attracts the most foreign direct investment (FDI) to Latin America, with US$ 31.6 billion in 2018. The economy can rely on its income-generating mining industry for the country, contributing 8.3% to industrial GDP and 2.5% to national GDP. The sector is also a source of employment in the country, with nearly 2 million indirect jobs in 2018.
In order to keep up with changing commercial contexts, Mexico must protect its crucial mining sector by introducing technology and innovative methods to improve efficiency and sustainability. We observe the importance of innovations and technologies in Mexico’s mining sector.
Overview: Mexico’s mining sector
The Mexican mining sector remains attractive for foreign investment. In 2018, Mexico’s mining production amounted to US$12.57 billion.
A land full of resources
Mexico’s landscapes are rich in resources and geological potential. In the year 2018, of the US$ 32.7 billion in FDI received by Mexico, mining received nearly US$ 1.4 billion. A large proportion of these FDI flows went towards gold, copper, zinc, and uranium production, which the country owns in abundance.
In 2018, Mexico was the world’s leading silver producer with 6,100 tons of silver. The country was also the ninth-largest producer of gold, with nearly 130.5 tons in the same year. Mexico produced 3% of the world’s copper, making it the seventh-largest producer with 826,733 tons produced.
Some of the minerals produced by Mexico are of great importance to countries such as the United States, which have a high demand for fluorspar, graphite, and strontium. Mexico is the world’s second-largest producer of fluorspar and has a soil reserve of approximately 32,000 tons, with the United States as its leading export destination (72% of Mexican production). Mexico exports 33% of this production to the United States.
The Central American country’s natural richness of its soils enables it to position itself as an essential player in the global mining market.
Government mining agenda
Mexican President Andrés Manuel López Obrador (AMLO) announced his intention not to raise mining taxes in the country. This decision aims to boost local and foreign investors a reason to increase or start investing in the country. This measure encourages the creation of new businesses in the country.
Mexico has faced some challenges in creating a healthier and more competitive environment for its industry – one crucial examples being ensuring security and preventing illegal mining operations. But as these challenges are high on the government’s radar, this means that there is also a significant opportunity for companies specializing in site security and mining personnel, in supporting the positive growth of the sector. To combat security and other risks associated with mining and increase social acceptance by local communities, authorities are implementing new initiatives.
Notice from the Under-Secretary of Mines of the Economic Secretariat
In an interview with newspaper El Economista, Francisco Quiroga, Under-Secretary of Mines of the Economic Secretariat, said the government was taking action to facilitate new investments for discovery mining in Mexico, and other mining activities. The government intends to implement draft protocols and guidelines to support better community relations, well management, water, and security programs. These policies will also target companies’ access management, and providing them with more robust resources necessary for the success of their project.
While mining sector stakeholders in Mexico may still hold concerns about security or community support for their projects, the region remains an attractive investment option for private companies, given the country’s immense natural wealth.
The next key step for the Mexican government to approve the appeal of this sector is to demonstrate a willingness to welcome technology and innovation. Not only will a modernized mining sector make more efficient use of the country’s lands, but increase its competitiveness to other major mineral producers regionally and worldwide.
Technology and innovation in mining
Like all sectors considered major contributors to national economies, the mining sector has been strongly impacted by increasing technological changes. Its rapid exposure and advances in automation, and digitization are providing new opportunities for the sector’s commercial actors. These include new introductions such as autonomous vehicles, automated tunnel drilling and drilling systems, drones, and intelligent sensors, which are designed to improve the efficiency and management of exploration operations, and reduce waste
Local and foreign mining companies operating in Mexico are continually seeking to improve their operations, safety, productivity, and project construction times. These requirements often drive their solutions towards using technological means that are more sophisticated than those currently in use. This opens up opportunities to use advanced modeling and simulation tools for new mining operations.
Between 2016 and 2017, the government implemented a new set of stringent environmental control measures for discovery mining companies in Mexico. To meet these new environmental requirements and norms, companies are also in search of new solutions for gas detection, soil stabilizers, dust collection systems, ventilation systems, water filtration, and erosion control.
Underground ventilation fans
Proper ventilation in a mine is essential for the effective operation of the mine. Mine fans provide better control of air movement, quantity, and direction in the mine’s underground areas. A lack of ventilation can lead to a decrease in worker productivity and efficiency, as well as an increase in risk to employee safety and health. Besides, helping to breathe the fans helps to filter the air and eliminate chemical and physical contaminants that are frequently present in the ground.
The use of new, automated sensors integrated into underground ventilation fans allows them to consume less energy. When there is no movement or light in a work area, the fans will stop. When motion or fire is detected, they turn on automatically.
Artificial intelligence and autonomous equipment
Artificial intelligence (AI) is at the forefront of mining innovation. Used to improve operational efficiency, AI is crucial to the future of the mining sector. It can be used to automate actions that are difficult for humans to operate 24 hours a day, with higher productivity. It also helps to prevent breakdowns, anticipate maintenance, and increase staff safety.
There are, therefore, many advantages to integrating new technological solutions that include AI into mining operations.
Among other things, mining companies in Mexico need to improve their image towards local communities that are very sensitive to the impact of mining companies on the environment.
The mining sector is therefore calling out for technologies that allow them to manage and treat their waste more efficiently and ecologically. ‘Green’ energy solutions can bring autonomy to their various project sites, and to water treatment and filtering systems. Eco-friendly tech solutions can enable companies to reduce their environmental impact, comply with local and international legislation and expectations, and also be more easily accepted by local communities.
New security solutions
Finally, new and innovative security systems and products are in especially high demand in Mexico’s mining scene. Companies proposing new safety systems for mining installations, or tools to improve the safety of personnel when they work, will be well-received amongst the potential innovation opportunities in the country. Intelligent technologies could be used to support the security of mining sites, with cameras, security gates, facial recognition systems, or others.
The challenge for the Mexican government will be to ensure that automation and artificial intelligence (AI) techniques do not undermine efforts of shared value. Such as employment and investment in local communities or the division of the sector into low-wage, low-skilled, and high-paying jobs for those who can benefit from the transition to new technologies.
Their role will include putting in place policies and legislation that allow for innovative proposals to be considered while managing risks.
As the region is rich in diversity and volume of natural resources, its yield potential is high. Solutions that can improve productivity, safety, and even limit environmental impacts have the potential to shape the region’s mining future. A large number of foreign mining companies and mining services companies (mainly from the United States and Canada) are already active and successful in Mexico’s mining and resource sectors. In this perspective, the best opportunities exist for companies that can work with other local partners through technology transfer, complementary product offerings. Or, by offering niche high-tech products and/or services that are not already available in the local market and can address core issues.
Seek guidance for market entry in Mexico’s mining sector
The Mexican mining market and its opportunities offer high potential for long term success with technology-based service companies focussed on mining. To facilitate your entry into this new market and be ready for its specificities, you will need a local expert to guide you.
At Biz Latin Hub, our team of local and expatriate experts in Mexico will be pleased to assist you in your project. We customize our range of market entry and back-office solutions to the specific needs of your project, including company formation, visa processing and corporate compliance services to enable a prosperous and successful expansion.
If you want to expand your mining activities in Mexico, please contact our friendly Mexico team at [email protected].
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