Investment in the mining sector increased by 14.3% last year but the total dollar figure was only just over half what it was in 2012, according to a new report by the Mexican Chamber of Mines, Camimex.
Almost US $4.3 billion flowed into Mexico’s mines in 2017 whereas in the final year of former president Felipe Calderón’s administration investment reached just over US $8 billion, or 48.5% more than last year.
Camimex also said that the value of mining production rose 8.9% last year to reach US $13.66 billion, up from US $12.54 billion in 2016.
Outgoing Camimex president Daniel Chávez said the mining sector had experienced an acceptable recovery in 2017.
Mining contributed to 2.5% of Mexico’s gross domestic product (GDP) last year and was the sixth largest source of foreign exchange after the automotive sector, electronics, remittances, petroleum and tourism.
On the back of last year’s improved performance, the federally-run Fondo Minero or Mining Fund — created to carry out development projects in mining-oriented municipalities and states — has now amassed 12.6 billion pesos (US $642.5 million).
Given the healthy state of the fund, both Camimex and mining undersecretary Mario Alfonso Cantú Suárez agreed that it is an opportune time to evaluate how the money is collected and what it is being used for.
Under federal law, mining companies have been required since 2014 to contribute 7.5% of their income in taxes with a further 0.5% for extracting precious metals such as gold, silver and platinum. The new tax was imposed in addition to the existing company tax rate of 30%.
In the latest Camimex report, Chávez called on the federal government to move to restore Mexico’s international competitiveness, citing a competitive tax policy — including allowing the deduction of 100% of pre-operating expenses — as a priority.
Of every 100 new exploration projects, only one is fully realized, the report said, because the exploration period takes from two to five years and the costs incurred during the period are not deductible.
“Mexico has a significant tax burden that makes it less competitive compared to countries such as Canada, Peru and Chile,” Chávez charged.
According to the Annual Survey of Mining Companies by the Canadian think tank the Fraser Institute, Mexico dropped to 5oth place out of 91 jurisdictions around the world last year based on its geologic attractiveness for minerals and metals and the extent to which government policies encourage or deter exploration and investment.
Source: Milenio (sp)