Mexico Mining to Boom

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Mexican mining sector is estimated to hit an average annual growth of 6.43% in value over the coming five years, to reach a value of US$156.6bn by 2015.

There are several world-class mining projects being developed in the country, with around 740 active exploration projects also currently being undertaken.

According to the head of Camimex (Mexico's Chamber of Mines), Sergio Almazan, revenues from Mexican mining for 2010 are expected to have surpassed US$13bn, which would make mining the country's third-largest generator of revenue (after oil and remittances from abroad).

Furthermore, Almazan believes that total investment in Mexican mining over the 2007-12 period will stand at more than US$21bn: a 'historical high' for the sector.

Against this propitious backdrop, a sharp increase in metal production is expected. It is estimated that overall Mexican silver production can increase by around 14% over the coming five years.

For copper, the end of the three-year long strike at Grupo Mexico's Cananea mine has now set the scene for a sharp increase in output over the forecast period to 2015. The announced increase from Cananea alone will result in a threefold increase in Mexico's copper output and easily surpass existing mines' production levels.

Taking these dynamics into account, Mexican copper production is expected to increase by an annual average rate of 25.1% over the forecast period, reaching 730ktpa in 2015.

Still there remain certain downside risks to metal production forecasts; Mexico's growth potential is restricted by continued violence in the country, relating to the drug trade, as well as relatively high levels of corruption and a fairly inflexible labour market. In addition, falling grades are likely to continue to restrict growth at existing mines.