Mexican Mining Investment May Fall 30% to $10.5 Bln (Update1)
bloomberg.com
By Carlos Manuel Rodriguez and Andres R. Martinez
April 16 (Bloomberg) -- Mexico’s mining industry investment may drop as much as 30 percent through 2012 as companies slash exploration because of lower metal prices and labor disputes, according to the country’s mining group.
Domestic and foreign companies may invest $10.5 billion during the five-year period ending in 2012, Sergio Almazan, executive director of Mexico’s Mining Chamber, said today in an interview in Mexico City. The chamber said in 2008 investment would reach $15 billion in that period.
Investments “are lagging 20 or 30 percent due to the current economic and labor environment,” he said. “Most of the needed closings and job cuts, due to financing problems, already happened in the last quarter of 2008.”
Companies such as BHP Billiton Ltd., the world’s largest miner and Freeport-McMoRan Copper & Gold Inc. have cut spending and postponed projects as the global economic crisis reduced demand for metals.
Labor disputes since 2006 have cost mining companies in Mexico $3 billion in lost production, according to Almazan.
Grupo Mexico SAB, Mexico’s largest mining company, yesterday received labor court approval to fire Cananea miners and reopen the mine after about 20 months of strikes.
The Mexico City-based company transferred a $2 billion investment budget from Mexico to Peru in 2007 due to strikes affecting its local mines.
Silver Producer
Industrias Penoles SAB, the world’s largest producer of silver, said on April 14 it is working to resume deliveries at its Met-Mex silver and gold refinery after workers agreed to end a nine-week strike.
The mining association is not expecting more mines to close this year in Mexico. “I think companies are being forced to reduce costs and be more efficient,” Almazan said.
Almazan expects copper prices to average $1.80 a pound this year.
Mexican copper production should increase as much as 40 percent this year to 350,000 metric tons, according to the mining chamber. Gold output should have a similar growth rate, with production of 70 tons this year, and 100 tons in 2010, Almazan said.
To contact the reporters on this story: Carlos M. Rodriguez in Mexico City at carlosmr@bloomberg.net; Andres R. Martinez in Mexico City at amartinez28@bloomberg.net.
Last Updated: April 16, 2009 17:11 EDT |
