Mexico is a mineral rich country which has one of the largest concentrations of metals and minerals in Latin America and is a leading producer of silver, bismuth, lead and zinc. Leading on from growth in the review period, the Mexican mining industry is expected to continue to grow in the forecast period (2010 to 2015 ), led by demand from the power, manufacturing and infrastructure industries. Despite controversial new mining taxes, FDI in the Mexican mining industry is also expected to grow.
Demand for precious metals will drive growth in forecast period (2010 to 2015)
In the review period (2004 to 2009), the Mexican mining industry grew at a CAGR of 10.9% and was valued at nearly US$10 billion, driven by increasing prices in the precious metal industries, particularly the silver industry. In the forecast period this growth is expected to continue at a CAGR of 3.2% and see total mineral production in terms of volume increase from just over 300 million tons, to nearly 400 million tons.
With strong domestic and global demand for minerals expected into the forecast period (2010 - 2015), as the power, infrastructure and manufacturing industries in Mexico continue to expand, it is predicted that the price of minerals will continue to rise, particularly for gold and silver, as Mexico has one of the largest concentrations of silver in the world.
Demand for minerals will come from power, manufacturing and infrastructure industries
In the review period (2004 to 2009), a large number of coal fired power plants were constructed in Mexico. The Mexican Energy Ministry has indicated that in the forecast period more power plants may be constructed, and that they would use domestically produced coal as their feedstock. In 2009, coal production in Mexico stood at just over 16 million tons, compared to approximately 7 million tons in Brazil and this indicates the high level of coal production in Mexico.
In addition to this, the infrastructure industry will also contribute to growth in the Mexican mining industry, as the Mexican government plans to implement a variety of construction projects in the forecast period. The Mexican construction industry almost doubled in value during the review period and in the future this growth is expected to continue as the construction of hospitals, shopping centres, hotels and offices will require mined minerals such as cement, aluminium, iron and steel.
The automobile industry, which is the eleventh largest in the world, will also contribute to increased mineral production in Mexico, as it requires large amounts of steel, aluminium and lead. In the forecast period, car production in Mexico is expected to grow at a CAGR of 7.6% and to produce nearly 3,000 units per annum. The production of aluminium will increase significantly, as the automobile industry widely uses this for its lightweight and fuel efficient qualities.
Mining equipment industry will experience growth
As Mexico’s mining industry grows in the forecast period, so too will its mining equipment industry, as companies establish themselves in the country to take advantage of increasing mineral production levels. This growth will be further stimulated by demand from the power, manufacturing and infrastructure industries which will create increased demand for minerals and therefore the mining equipment to extract and produce them. Additionally, the increasing demand for productive, safe and efficient mining equipment, which is able to maintain high production levels at minimum risk to safety, will also aid growth in the mining equipment industry, which will meet this demand through the supply of new types of mining equipment.
Foreign direct investment (FDI) encouraged by Mexican government
In order to attract both foreign and domestic investment, the Mexican government allows 100% equity and private ownership for the exploration, development and production of minerals, and the National Mining Development Plan allows private companies to mine minerals which were previously considered exclusive to the government, such as sulphur, phosphorous, potassium, iron ore and coal. As a result, in 2009 FDI in the Mexican mining industry stood at just over US$900 million and this is expected to increase in the forecast period This rise will also be encouraged by the low labor and production costs in Mexico and the fact that approximately 60% of its mines are open pit, which allows for easier mining and production.
Tax on mining output may be counterproductive
The Mexican government’s decision to levy taxes on mining output rather than sales may damage the mining industry, as the global recession led to inventory levels in Mexico’s mines increasing, resulting in huge stockpiles of mining output to be sold once the economy recovers. If mining taxes were imposed on sales volume rather than mining output, these huge stockpiles would not be a tax burden for mining companies and only the portions that were sold would be taxed. It is thought that this decision to tax mining output may discourage new investors in the Mexican mining industry whilst the stockpiles remain.
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Industry Review is a collection of incisive, regularly updated market reports across 40+ industry sectors and 100+ countries.
We provide access to the latest data on global and local markets, key industries, top companies, M&A activity, new product launches and trends so you can make faster and better informed business decisions.
The reports in our store draw on robust primary and secondary research, proprietary databases, industry surveys and insightful analysis from our own expert teams and from carefully selected third-party publishers.
With access to over 400 in-house analysts and journalists, and a global media presence in over 30 industries, Industry Review delivers in-depth knowledge of local markets worldwide.
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For more information on the article, please contact:
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Demand for precious metals will drive growth in forecast period (2010 to 2015)
In the review period (2004 to 2009), the Mexican mining industry grew at a CAGR of 10.9% and was valued at nearly US$10 billion, driven by increasing prices in the precious metal industries, particularly the silver industry. In the forecast period this growth is expected to continue at a CAGR of 3.2% and see total mineral production in terms of volume increase from just over 300 million tons, to nearly 400 million tons.
With strong domestic and global demand for minerals expected into the forecast period (2010 - 2015), as the power, infrastructure and manufacturing industries in Mexico continue to expand, it is predicted that the price of minerals will continue to rise, particularly for gold and silver, as Mexico has one of the largest concentrations of silver in the world.
Demand for minerals will come from power, manufacturing and infrastructure industries
In the review period (2004 to 2009), a large number of coal fired power plants were constructed in Mexico. The Mexican Energy Ministry has indicated that in the forecast period more power plants may be constructed, and that they would use domestically produced coal as their feedstock. In 2009, coal production in Mexico stood at just over 16 million tons, compared to approximately 7 million tons in Brazil and this indicates the high level of coal production in Mexico.
In addition to this, the infrastructure industry will also contribute to growth in the Mexican mining industry, as the Mexican government plans to implement a variety of construction projects in the forecast period. The Mexican construction industry almost doubled in value during the review period and in the future this growth is expected to continue as the construction of hospitals, shopping centres, hotels and offices will require mined minerals such as cement, aluminium, iron and steel.
The automobile industry, which is the eleventh largest in the world, will also contribute to increased mineral production in Mexico, as it requires large amounts of steel, aluminium and lead. In the forecast period, car production in Mexico is expected to grow at a CAGR of 7.6% and to produce nearly 3,000 units per annum. The production of aluminium will increase significantly, as the automobile industry widely uses this for its lightweight and fuel efficient qualities.
Mining equipment industry will experience growth
As Mexico’s mining industry grows in the forecast period, so too will its mining equipment industry, as companies establish themselves in the country to take advantage of increasing mineral production levels. This growth will be further stimulated by demand from the power, manufacturing and infrastructure industries which will create increased demand for minerals and therefore the mining equipment to extract and produce them. Additionally, the increasing demand for productive, safe and efficient mining equipment, which is able to maintain high production levels at minimum risk to safety, will also aid growth in the mining equipment industry, which will meet this demand through the supply of new types of mining equipment.
Foreign direct investment (FDI) encouraged by Mexican government
In order to attract both foreign and domestic investment, the Mexican government allows 100% equity and private ownership for the exploration, development and production of minerals, and the National Mining Development Plan allows private companies to mine minerals which were previously considered exclusive to the government, such as sulphur, phosphorous, potassium, iron ore and coal. As a result, in 2009 FDI in the Mexican mining industry stood at just over US$900 million and this is expected to increase in the forecast period This rise will also be encouraged by the low labor and production costs in Mexico and the fact that approximately 60% of its mines are open pit, which allows for easier mining and production.
Tax on mining output may be counterproductive
The Mexican government’s decision to levy taxes on mining output rather than sales may damage the mining industry, as the global recession led to inventory levels in Mexico’s mines increasing, resulting in huge stockpiles of mining output to be sold once the economy recovers. If mining taxes were imposed on sales volume rather than mining output, these huge stockpiles would not be a tax burden for mining companies and only the portions that were sold would be taxed. It is thought that this decision to tax mining output may discourage new investors in the Mexican mining industry whilst the stockpiles remain.
To purchase the full version of this report, please click here.
About Industry Review:
Industry Review is a collection of incisive, regularly updated market reports across 40+ industry sectors and 100+ countries.
We provide access to the latest data on global and local markets, key industries, top companies, M&A activity, new product launches and trends so you can make faster and better informed business decisions.
The reports in our store draw on robust primary and secondary research, proprietary databases, industry surveys and insightful analysis from our own expert teams and from carefully selected third-party publishers.
With access to over 400 in-house analysts and journalists, and a global media presence in over 30 industries, Industry Review delivers in-depth knowledge of local markets worldwide.
For more information, please visit our website at www.industryreview.com
For more information on the article, please contact:
Press Contact:
Shelly Wills
Tel: +44 (0) 20 7936 6671
shelly.wills@industryreview.com
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