By THE PULSE NEWS MEXICO STAFF
Political uncertainty, excessive bureaucracy and growing insecurity have caused Mexico to drop 13 places on the international mining attractiveness index in just two years, and investment in the sector to fall 42.8 percent in that same period.
According to the Canadian Fraser Institute research center, while in 2018 Mexico ranked 29th out of 83 mining jurisdictions, by 2020, it had dropped to 42nd out of 77 jurisdictions.
During the same period, a Fraser Institute report released last month indicated that investment in Mexico’s mining sector — which accounts for 8.3 percent to the industrial GDP and 2.5 percent of the national GDP — also fell dramatically, from $4.897 million in 2018 to just $2.8 billion in 2020, a 42.8 percent decrease.
The Fraser report pointed out that among the top reasons for a drop in investor confidence were insecurity, labor regulation and political instability, as well as the nationalist discourses on mining that have been registered under the present administration of President Andrés Manuel López Obrador (AMLO).
Investors also mentioned concerns about bureaucratic actions that complicate the delivery of mining concessions.
Yet another worry expressed by potential investors is the possibility of the government’s nationalization of lithium mining, which the AMLO administration has threatened to do on several occasions.
“The mining sector wants to continue investing, but we need certainty from the government,” Fernando Alanís, president of Mexican Mining Chamber (Camimex), told Reforma newspaper.
In addition, he said, new concessions have not been granted, which has negatively impacted the continuity of some mining projects.
Red tape for obtaining permits for land use, environmental impact studies and other paperwork have created endless bureaucratic hurdles, Alánis said.
Sergio Almazán, president of the Association of Mining Engineers, Metallurgists and Geologists of Mexico (Aimmgm), warned that if Mexico continues to fall in the world ranking, mining investments will go to other countries or jurisdictions.
“For our country, that will translate into less investment in exploration, less employment and fewer opportunities to find new deposits (of minerals), as well as less tax revenues for the government,” he said.
In 2018, the Mexican Mining Chamber (Camimex) reported that the mining industry contributed 40.422 billion pesos in tax revenues. In 2019, that figure dropped to 30.017 billion pesos, and last year, the amount was 30.374 billion pesos.
The Frazer Institute’s internationally recognized Investment Attractiveness Index is a composite ranking that combines the Policy Perception Index (PPI) and the results of the Best Practices Mineral Potential Index.