Bullish gold, silver prices push Mexican mining to 6 months of growth

Growth of non-oil mining activity in Mexico reached 8.6% year-on-year in June, the industry's sixth consecutive monthly increase, according to revised figures from statistics institute Inegi.

Despite the strong growth, it was down somewhat from the 12.5% expansion of the industry seen in May.  

Inegi had previously reported a decline in mining production during the first quarter, with a 5% fall in March that Inegi has now revised upward to a year-on-year hike of 1.3%.

In the first six months of 2024, mining activity grew 5.6% compared with the same period of 2023, according to Inegi's monthly industrial activity report.

Gold and silver prices have been on a bullish streak this year due to global geopolitical tensions, which has translated into improved performance in the sector. 

Gold fluctuated around US$2,470/oz this week, meaning it has gained almost 20% so far this year. Silver prices are approaching US$28/oz, climbing approximately 16%. 

Mining services  

In contrast, activity in mining-related services plummeted by almost 25% year-on-year in June, the sixth consecutive monthly decline. In January-June, the sector shrank by 13%.

Non-oil mining has been affected by the government's policy to stop granting new concessions, as well as by the uncertainty generated after the May 2023 mining reform, which gave geological service SGM the exclusive right to conduct exploration, among other changes.

The lack of regulations for four amended laws that apply to the sector has halted various mining processes, especially those linked to exploration.

In July, mining chamber Camimex warned that the reform included provisions considered unfeasible, with exploration activity being the worst affected.

Another proposal to ban open-pit mining, which remains to be debated in congress, is also keeping the industry on tenterhooks, although many expect the new government of Claudia Sheinbaum, which takes over on October 1, to take a more amenable stance towards private investment in mining.

Camimex said the challenge is to work together with the authorities on a new legal framework for the mining industry that encourages responsible investment.