Mexico - Mining

Mexico's globally significant mineral sector was dominated by hydrocarbons, and ranked first in the production of silver, bismuth (28% of the world's total), and celestite (strontium mineral; 50% of world output); second in fluorspar (14% of world output); fourth in arsenic and graphite; fifth in molybdenum; among the top 10 in barite, cadmium, gypsum, mine lead, manganese ore, salt, sulfur, and mine zinc; and in the top 15 in mine copper, cement, gold, and crude steel (secondlargest producer in Latin America). Mexico's fourth, fifth, and sixth leading industries in 2002 were the production of iron and steel, petroleum, and mining, respectively, and, among export commodities, oil and oil products ranked third, and silver fourth.

GDP grew by 6.9% in 2000, the largest increase in 19 years, partly a result of the continued strength of the price of petroleum. Investment in the mining sector fell by 12% in 2000, to $698.2 million, by 24.7% in 1999, and was expected to fall to $646 million in 2001. The profitablity of the mineral sector was adversely affected by the high value prices of fuels—from 1998 to 2000, natural gas rose by 478%; electricity, 44%; and diesel, 23%. The total value of nonfuel minerals produced was $4.30 billion in 2000 and $3.78 billion in 1999; metals contributed 54% of the total, and sand and gravel was the highest value commodity—$809 million, a 25.6% increase over 1999. Copper followed, at $659 million, and silver and zinc contributed 19% each. Total exports in 2000 were valued at $166.5 billion, with nonfuel minerals accounting for $2.1 billion; metal exports totaled $1.9 billion. Silver was the largest source of foreign exchange ($439 million), followed by zinc ($218 million) and copper ($200 million). Two-thirds of Mexico's mineral exports went to the United States.

Silver output in 2000 was 2.62 million kg (metal content of ore). Peñoles mined 53% of Mexico's silver; its Fresnillo/Proaño mine, in Zacatecas, produced 743,400 kg. Peñoles also produced almost all of the country's refined silver, and mined 54% of its lead and 44% of its zinc, making it the country's second-largest zinc producer—Grupo Mexico mined 45% of Mexico's 392,791 tons of zinc in 2000. The same year a Peñoles subsidiary completed expansion of the mill capacity at the Sabinas zinc mine, in Zacatecas, to 840,000 tons per year, from 360,000 tons per year. A 51%-Peñoles-owned zinc mine, Minera Rey de Plata, was inaugurated in 2000, and had a mill capacity of 360,000 tons per year. Copper output in 2000 (by cementation, concentration, and leaching) was 364,566 tons; Grupo Mexico produced 319,100 tons from two open-pit and three underground mines. Bismuth output was 1,112 tons; celestite, 157,420 tons (all from Coahuila, and most converted to strontium carbonate); fluorspar (acid grade and metallurgical grade), 635,000 tons, up from 524,000 in 1996 (75% was produced in San Luis Potosí); iron ore (gross weight), 11.33 million tons, up from 10.18 million tons in 1996; cadmium, 1,297 tons; barite, 127,420 tons, down from 470,028 in 1996; and lead, 137,975 tons, down from 174,661 in 1997. In 2000, Mexico also produced antimony; mercury; tin; natural abrasives (comprising mostly pumice stone and emery, a granular, impure variety of corundum); clays (bentonite, common clay, fuller's earth, and kaolin); diatomite; feldspar; hydrated lime and quicklime; magnesite and magnesia (including refractory, caustic, electromelt, and hydroxide); mica; nitrogen; perlite; phosphate rock; sodium compound (including bloedite, a natural sulfate); stone, sand, and gravel (including common calcite, dolomite, limestone, marble, quartzite, and glass sand [silica]); talc; and wollastonite. No tungsten was produced in 2000; no crystalline graphite in 1999 and 2000; and no vermiculite in 1998–2000.

Mexico had 15% of the world's graphite reserves (3.1 million tons) and 13% of silver reserves (37,000 tons). The country also ranked among the highest in reserves of cadmium (35,000 tons), mercury (5,000 tons), and selenium (4,000 tons). Lead reserves totaled 1 million tons; zinc reserves, 6 million tons; molybdenum, 90,000 tons; copper, 14 million tons; and manganese, 4 million tons. Sulfur was found in the salt domes of the Isthmus of Tehuantepec—reserves of all forms amounted to 75 million tons.

An area in Baja California potentially rich in gold, silver, copper, lead, and zinc was discovered by a sensor on the US space shuttle Columbia in 1981. Northern Mexico dominated the production of minerals. Metallic deposits were mostly in the Sierra Madre ranges; copper, gold, and manganese were mined mainly in the northwest (Sonora produced more than 80% of the nation's copper and received three-quarters of foreign investment); lead, zinc, and silver in central Mexico (Zacatecas was the principal state for silver, and Chihuahua was the leader in lead and zinc); and coal and petroleum in the east. Employment in the mineral sector totaled 220,100 in 2000, including 58,400 in metal mining, 57,200 in iron and steel, and 46,500 in nonmetallic minerals.

Five large diversified companies dominated the production of nonfuel minerals, operating 40 mining units. The medium-sized mining sector operated 20 units and produced all of the celestite, feldspar, fluorspar, gypsum, and silica sand, and almost 90% of the graphite. The small-sized mining sector operated 170 units and produced 75% of the kaolin. In 2000, 504 international mining companies were exploring in Mexico, including 203 Canadian companies and 199 from the United States.

Under the constitution, minerals were part of the national patrimony. Nearly all formerly state-owned mines had been privatized by 1997. Although low prices for base metals (except copper) and precious metals have hurt the industry, the North American Free Trade Agreement (NAFTA) was expected to have a significant role in attracting foreign investment to the mineral sector. Amendments in 1996 to the 1992 Mining Law removed many of the restrictions regarding the participation of private and foreign companies, permitting direct investment with up to 100% ownership of equity in exploration works and activities, and allowing up to 100% foreign participation in production. Further revisions in 1999 were geared to increase participation of the private sector, and competitiveness of mining companies in the country.