Business Monitor International


Mexico Mining Report

Published 12 May 2014

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Mexico Mining Report

BMI View: We forecast Mexico's mining sector will see steady growth through 2018 as mining companies continue to invest in both base and precious metals mining projects . We forecast the value of Mexico's mining sector to grow to USD16.9 bn by 201 8, representing average annual growth of 2.7% . The sector will benefit from a stable business environment , though mining royalties pose a downside risk .

Mexico Dominates Global Silver Industry, But Other Metals Increasingly Prominent
Mexico - Share & Rank Of Global Mining Output, 2013

Mexico's vast silver resources will allow it to remain the world leader in mined silver production over our forecast period. Silver miner Fresnillo will remain a sector leader, accounting for roughly one quarter of Mexican production. Junior companies will also seek to develop small- to medium-sized silver mines as well as gold deposits found alongside silver. Copper production will continue to be driven by Grupo Mexico, though we expect junior and mid-tier miners will also seek to develop copper projects. That said, we believe Mexico's copper output will trail others in the Americas, and expect Chile and Peru to receive the bulk of Americas copper-related investment in the coming years.

Risks To Outlook

We expect a few risks to remain prominent over the coming quarters. First, our forecast for copper prices to average lower over our forecast period and for silver prices to remain subdued leads us to see downside risk for mine development. Should various mineral deposits become economically unfeasible, both brownfield and greenfield projects could see delays until a more favourable price environment emerges. Second, the country's new mining royalties will present a new cost for miners in 2014 and beyond. While we believe Mexico's mining sector will remain competitive on a comparative basis, some mining firms have threatened to redirect long-term investment away from the country. Until we see firm announcements...

Table of Contents

BMI Industry View
7
Risks To Outlook
8
SWOT
9
Industry Forecast
11
Copper: Market Still Ripe For Expansion
11
Output Still Set To Grow Despite Weaker Prices
12
Table: Mexico - Selected Planned Copper Mines
13
Risks To Outlook
13
Table: Copper Production Forecast (Mexico 2010-2018)
14
Silver: New Projects To Maintain Strong Sector Growth
14
Strong Project Pipeline Enables Growth
15
Table: Mexico - Silver Projects
15
Risks Now To Downside
16
Table: Silver Production (Mexico 2010-2018)
17
Industry Risk Reward Ratings
18
Colombia & Chile Remain At The Top
19
Table: Mining Risk/Reward Ratings
19
Mexico & Peru See Improvement, While Brazil Falls Back
20
Weak Prices & Poor Operating Environments Hold Others Back
21
Risk/Reward Ratings
21
Rewards
21
Industry Rewards
21
Country Rewards
21
Risks
22
Industry Risks
22
Country Risks
23
Table: Mining Industry Forecasts (Mexico 2010-2018)
23
Regulatory Development
24
Recent Developments
24
Solid Business Environment But Royalties Cloud Picture
24
Tax Regime
25
Corruption Remains Vexing But Progress To Continue
25
Table: Table: Political Overview
26
Table: Regional Regulatory Index
27
Commodities Forecast
28
Commodity Strategy
28
Iron Ore: Chinese Stimulus Not A Game Changer
28
Steel: Gradual Rationalisation Insufficient To Boost Prices
30
Aluminium: Recent Rally Unlikely To Persist Into H214
31
Copper: Bearish Forecast Appears Well Placed
32
Lead: Picking Up Autos Sector Tailwinds
33
Nickel: Recent Rise To Fall Back In H214
34
Zinc: Potential Test Of Resistance In Coming Weeks
36
Table: Select Commodities - Performance & BMI Forecasts
38
Competitive Landscape
39
Grupo Mexico Leads Sector
39
Table: Mexico - Competitive Landscape
39
Precious Metals Miners Proliferate Sector
39
Company Profile
41
Industrias Pe-oles
41
Table: Industrias Pe-oles - Key Financial Data
42
Grupo M-xico
44
Table: Grupo M-xico - Key Financial Data
46
Regional Overview
48
Americas Overview
48
1
48
2
49
Table: Americas - Regulatory Updates
50
3
51
4
52
5
55
Global Industry Overview
57
Challenges
57
Table: Mining - Select M&A Deals
61
Cause For Optimism
64
Methodology
71
Industry Forecast Methodology
71
Sources
72
Risk/Reward Rating Methodology
73
Table: Weighting Of Indicators
75

The Mexico Mining Report has been researched at source and features Business Monitor International (BMI)'s mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Mexico Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Mexico.

Key Benefits

  • Use BMI's independent industry forecasts on Mexico to test other views - a key input for successful budgeting and planning in this mining market.
  • Target business opportunities and risks in Mexico's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Mexico.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.

Coverage

BMI Industry View

Summary of BMI's key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.

Business Environment Rankings

BMI's Mining Business Environment Rankings provide a country-comparative Risk-Reward Rankings index aimed at investors (mining companies and support service providers) in the regional mining market. The rankings methodology makes sophisticated use of over 40 industry, economic and demographic data points and is part of BMI's integrated Country Risk-Industry rankings products.

Key Projects

Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.

BMI Industry Forecasts

Historic data series (2009-2012) and forecasts to end-2018 for all key industry and economic indicators (see list below), supported by explicit assumptions, plus analysis of key downside risks to the main forecast. Indicators include:

  • Mining Industry: Industry size (US$mn), real growth (%), % of GDP, employment ('000), workforce as % of total workforce, average wage (US$).
  • Output:Production volumes ('000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
  • Exports: Value of exports (US$mn) for all major metals, minerals, ores and gems mined in each state .
  • Commodity Markets: Global demand, supply, stocks and benchmark prices (US$) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI Macroeconomic Forecasts

BMI forecasts to end-2018 for all headline macroeconomic indicators, including real GDP growth (%), inflation (%), fiscal balance (% of GDP), trade balance (US$bn), current account (US$bn) and external debt (US$bn).

Competitive Landscape Tables & Analysis

Comparative company analyses and tables detailing by US$ sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc