Insecurity in Mexico costs mining companies up to 10% of production, they see a brake on investments

The insecurity that plagues Mexico It imposes costs on companies in the mining sector equivalent to the value of 10% of their production, mainly due to product theft and the hiring of security personnel, the main local association for the sector said on Monday.

The Latin American country is going through a wave of violence linked to organized crime gangs, which in recent years have diversified their activities to crimes such as robbery, kidnapping and extortion.

“Unfortunately, mining throughout the country, both in the north and in the south, is being affected by insecurity“he said at a press conference. jamie gutierrezpresident of the Mining Chamber of Mexico (Camimex), who described the problem for the industry as a “additional tax”.

“Quantifying it varies from company to company, but thefts from mineral and concentrate to threats and extortion often represent up to 10% of production.”, he added, without specifying volumes, nor monetary value, nor type of minerals.

In 2022, the value of local mining-metallurgical production totaled 316,956 million pesos (US$18,584 million), with a production of 4.77 million ounces of gold, 213.2 million ounces of silver and 753,885 tons of copper, according to data officers.

Investments

The Camimex He later estimated in a report that this year the industry could make investments of US$ 5,210.6 million, slightly down from the 5,264.7 registered in 2022, according to an annual report.

The report does not elaborate on the reasons for the discharge and gutierrez He said earlier that the chamber was still studying the potential impact of a recent reform to the law that governs the industry promoted by the Government and that toughens the rules of the game.

“In order to clearly say how much it will be affected we need to finish a study that we are doing, which will be delivered this week at the beginning of the next, (but) the uncertainty makes investments move away”, I underline.

The Camimex brings together the largest companies in the industry that operate in the country such as Grupo México, one of the largest copper producers in the world, and Penoles Industriesone of the world’s largest producers of refined silver.

The rise in crime seems to have been unable to be stopped despite the fact that in 2020 Mexico announced the formation of a police corporation dedicated to protecting the mining industry, a sector that contributes 2.46% to local GDP and is one of the most six main sources of foreign exchange in the country.