Mexican FDI up 30% with mining's nearly doubling

Foreign direct investment (FDI) in Mexico reached US$32.9bn in January to September, up 30% compared to the same period 2022, the economy ministry said in a release. 

However, the comparison excludes the USS$6.88bn due to the merger of broadcasters Televisa and Univisión and the restructuring of airline Aeroméxico in the first half of last year, the ministry said. If those factors are included, FDI in the first nine months would have increased only 3%.

“These results represent the confidence of investors to maintain, expand and make new investments in the country,” the ministry said.

Of the total between January and September, 76% corresponded to reinvestments of profits. New investments represented 8% and the remaining 16% to intercompany accounts.

The US accounted for 41% of FDI in the nine months, while 11% came from Spain, 9% from Germany, 7% from Argentina, 7% from Japan, 7% from Canada and the rest from countries including the UK, the Netherlands, Switzerland and France.

By sector, 53% corresponded to manufacturing, which partly reflects the nearshoring phenomenon with investments made by companies such as Ternium in Nuevo León state.

Within the manufacturing category, investment was mainly directed to transportation equipment, metals, beverages and tobacco, chemical products, computer equipment, power generation, plastics, food, and other machinery and equipment.

Financial services accounted for another 22% of total FDI, while the rest was in mining, temporary accommodation, transportation, construction, and wholesale and retail trade.

MINING FDI

FDI in mining, including oil and gas, increased 90% to US$2.90bn compared to US$1.53bn between January and September last year, according to the ministry. The sector's share of the total rose from 4.8% to 9%.

In H1, mining had only attracted US$737mn in FDI, so in Q3 the industry saw US$2.16bn, according to official data.

BNamericas tried to contact representatives of mining chamber Camimex, the metallurgical mining engineers and geologists’ association AIMMGM and the economy ministry to comment on the cause for the rebound but did not receive immediate responses.

In 2022, FDI in the Mexican mining sector fell 66.5% to US$1.60bn, according to preliminary data. Camimex said in July that the metallic mining sector received US$810mn, down 71.2%, according to ministry figures.

The lack of new mining projects in Mexico largely explains the drop in FDI in non-oil and gas mining, according to Camimex, which has warned that one of the most worrying aspects of the mining reform that came into force in May is that less investment in exploration is expected.

The new legislation establishes that exploration be reserved for geological service SGM or other federal entities, so the chamber hopes that the regulations for the reform that should be published this month will put exploration conditions on a par with what happens in other parts of the world so that Mexico remains competitive.