By Tim Wood –
NEW YORK (ResourceInvestor.com) — Mexican mining officials made a strong showing at that the New York Institutional Gold Conference this week. Led by Dr. Salvador Ortiz-Vértiz, the General Mining Coordinator of the Ministry of Economy, the delegation primed investors on the country’s placid political conditions and market reforms, especially in the mining sector.
Mexico is reaping some advantage from political turmoil, development opposition, and rising mining taxes affecting countries to its south including Guatemala, Bolivia, Ecuador, Chile, Peru and Argentina.
Mexico is famous for its dominance of world silver mining, but officials want much broader exploration and exploitation so that mining’s share of the economy rises beyond the miserly percentage it currently commands.
Investors only started returning to Mexico en masse after NAFTA, but always mindful of the dire consequences for miners in the wake of the Mexican revolution of 1910-20. The 1994 Tequila crisis has also not been fully worked through although miners certainly benefit from the steadily depreciating peso.
One of Ortiz-Vértiz more important projects has been to get the state geological agency out of the prospecting business, and focused on data collection and mapping. The country’s geological potential is being systematically upgraded with digitised archives supplemented with new data being collected from ongoing survey campaigns.
Mexico’s integration with the US and Canada has made it a preferred destination for miners, and almost two hundred foreign companies are presently active in Mexico, most of them Toronto listed or funded. The country has also suffered none of the anti-mining ructions that have cut investor confidence further south.
Ortiz-Vértiz also made it clear that the low effective tax rate of 31% was unlikely to be increased. Miners can also look forward to a demand side appreciation of economics with the under-secretary expressing a clear disdain for royalties or other imposts which reduce investment and employment over the long-term.
Mexico scored well in the latest Fraser Institute rankings of mining destinations. It came in fifth, up from fourteenth a year earlier, and leapfrogging past a number of Latin American competitors.
The 2004 confrontation between Metallica Resources [MRB] and the Ejido (land co-operative) of Cerro San Pedro did cause a scare though. The company had its surface rights lease nullified for its gold and silver project at Cerro San Pedro, and has been unable to work the project for over a year as it works through several legal appeals.
BancoMext Trade Commissioner Edmundo González told Resource Investor that the Ejido’s were not a problem provided companies did their homework early enough. He stressed the importance of identifying and negotiating from the start with the most influential leaders of any Ejido; a task best suited to local fixers.
Mexico is slipstreaming Goldcorp’s [GG] presence in the country as a high profile NYSE-TSEX advert for its gold potential and attractive investment environment.