Mexico Mining Report

Published 15 May 2015

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Mexico Mining Report

BMI View: Mexico's mining industry will experience steady growth due to the sector's solid project pipeline and continued investment. The sector will benefit from a stable business environment , though continued mineral price weakness and violent conflicts pose a downside risk .

Solid Growth Ahead
Mexico - Mining Industry Value (USDbn) & Growth y-o-y (%)

Mexico will continue to be the world's largest silver producer due to the country's vast silver reserves. Silver miner Fresnillo will remain the sector's leader, accounting for roughly one quarter of Mexican production. Additionally, junior companies will seek to develop small- to medium-sized silver mines as well as gold deposits found alongside silver. Furthermore, copper production will continue to be driven by Grupo Mexico, though we expect junior and mid-tier miners will develop copper projects. Nevertheless, 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 wish to highlight that downside risks to our forecast remain. First, further than expected copper and silver price weakness could affect mine development in Mexico to a higher degree than expected. Should various mineral deposits become economically unfeasible, both brownfield and greenfield projects could see delays until a more favourable price environment emerges. Second, an escalation of violence stemming from the drug trade could result in significant project delays and ongoing operational concern. Although the issue has not widely affected the sector, it could prove problematic for junior miners operating in more remote areas of the country.

Table of Contents

BMI Industry View
7
Risks To Outlook
8
SWOT
9
Industry Forecast
10
Copper: Modest Growth Amidst Weak Price Climate
10
Output To Grow
11
Table: Mexico - Copper Mine Projects
12
Risks To Outlook
13
Table: Copper Production Forecast (Mexico 2014-2019)
14
Silver: Project Pipeline To Drive Growth
14
Strong Project Pipeline To Support Growth
15
Table: Mexico - Silver Projects
16
Headwinds Lie Ahead
16
Table: Silver Production (Mexico 2014-2019)
17
Industry Risk Reward Ratings
18
Mexico Risk/Reward Index
18
Rewards
18
Industry Rewards
18
Country Rewards
18
Risks
19
Industry Risks
19
Country Risks
19
Table: Mining Industry Forecasts (Mexico 2014-2019)
20
Americas Risk Reward Index
20
Regional Risks Increase Modestly
20
Weak Prices To Hurt, While Stronger Dollar A Mixed Blessing
21
Regional Outlook Unchanged Despite Some Reordering
22
Table: Americas - Mining Risk/Reward Index
23
Regulatory Development
24
Recent Developments
24
Positive Investment Outlook, Yet Royalties Diminish Attractiveness
24
Trade And Investment Risk Analysis
24
Commodities Forecast
28
Commodity Strategy
28
Ferrous Metals
28
Iron Ore: Price To Remain Under Pressure In 2015-2016
28
Steel: Subdued Prices Until 2017
30
Non-Ferrous Metals
33
Copper: Subdued Outlook, Despite Recent Rally
33
Lead: Prices Weakness To Continue
35
Nickel: Subdued Prices Due To Weak Demand Growth
36
Tin: Supply Deficits To Underpin Rally In Tin Prices
37
Zinc: Positive Multi-Year Outlook, But Increasing Risks In Months Ahead
38
Table: Select Commodities - Performance & BMI Forecasts
40
Competitive Landscape
41
Grupo Mexico Dominates Mining Sector
41
Table: Mexico - Competitive Landscape
41
Precious Metals Miners Proliferate Sector
41
Company Profile
43
Industrias Pe-oles
43
Table: Industrias Pe-oles - Key Financial Data
44
Global Company Strategy - Grupo M-xico - Q315
46
Table: Grupo M-xico - Key Financial Data
48
Regional Overview
49
Three Key Themes For Americas Mining
49
Regulatory Changes Still On The Cards
49
Dollar Strength And Oil Price Weakness To Push Down Costs
50
Southern Growth To Outpace North
51
Global Industry Overview
53
Global Overview
53
2
56
3
57
5
61
Methodology
63
Industry Forecast Methodology
63
Sources
64
Risk/Reward Index Methodology
65
Table: Weighting Of Indicators
66

The Mexico Mining Report has been researched at source and features BMI Research'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.

Industry SWOT analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.

BMI Industry Forecasts

Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:

  • Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
  • 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 (USDmn) for all major metals, minerals, ores and gems mined in each state.
  • Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI’s Mining Risk Reward Index

BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.

Competitive Landscape Tables & Analysis

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

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.

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.

Sources

The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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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