Mexico's Silver Industry Declines

A global mining survey released last week reveals that Mexico has lost attractiveness as an investment destination for the mining industry, despite being the top producer of silver globally, according to an article by Mexico Business.

Fraser Institute's Annual Survey of Mining Companies shows Mexico's rating in the Investment Attractiveness Index declined to 65.43 in 2019 from 73.91 in 2018.

In spite of this downturn, Mexico lands on the 5th spot in the overall ranking in Latin America lead by Chile (15^th in the world), Brazil (39th), Peru (45th). In the global index, Mexico ranks 51st in being the most attractive jurisdictions for mining investment.

Additionally, the Latin American country continues to be the leading silver producer in the world with 6,300 tons and is now the 12th producer of gold with 1,200 tons produced last year.

Aside from the global rating, Fraser Institute's Annual Survey of Mining Companies also gathered comments from leading companies on what might be the reason why countries decrease their attractiveness among investors in the mining industry.

"Licensing processes in Mexico are subjective and uncertain, which is a deterrent for investors," says the vice-president of a producer company with more than US$50M.

The COVID-19 outbreak also proves to be a major hurdle for the sector, as copper and zinc prices fall amid fears of the consequences of the contagion.

According to an article by Latin Post, there have been two confirmed cases of COVID-19 in Mexico. In Friday, the country's Health Department announced the second case of the COVID-19 confirmed in Mexico City. The first one was in the northwestern state of Sinaloa.

Studies reveal coronavirus remain on metal, glass and plastic surfaces for two hours to nine days.

However, these same fears have led to the increase of the value of gold to an all-time high in several years. Gold prices rose on Wednesday, as countries try to combat the economic impact from the fast-spreading coronavirus.

Grupo México, the country's largest mining corporation and the third largest copper producer in the world, announced in late February a significant investment even after it had to close down a mine in northern Mexico. The group is also the country's leading producer of silver, zinc, gold, lead and molybdenum, according to Mining Global.

With the closing of its San Antonio mine located in Aquiles Serdan, Chihuahua, the company has displaced 382 miners.

Nonetheless, Grupo México has set their expectations high for this year as it disclosed a US$1.992 billion investment in 2020 with an increase of 78 percent from last year's investment.

Two other industry giants Fresnillo and MAG Silver have recently announced that they will begin their production in Juanicipio mine in Zacatecas sooner than expected. Fresnillo holds a 56% interest in the joint venture, while the remaining 44% is owned by MAG Silver. The announcement alone has increased its stock to 10 percent. The joint venture will reportedly produce a total of 11.7 million ounces of silver and 43,500 ounces of gold.

This year, five silver projects in Mexico- including Juanicipio mine - is seen to produce an additional 23 million ounces, cementing Mexico's position as the world's top silver producer.