THE BAJA POST
One of Mexico industrial giants, Grupo Mexico, is looking forward to investing 3.1 billion dollars for metal refining in the northwestern state of Sonora, and power infrastructure for a mine that will carry inexpensive electricity to Baja California peninsula.
The company was news all over the world a few years ago when one of its biggest mines spilled toxic waste to the Sonora River, causing a big ecological disaster, and got away with it, nothing happened to the company, responsible for one of the most serious ecocide cases in Mexican history.
Nevertheless the company has informed about a six-year investment plan, which also includes a 2.3 billion dollar growth in its capacity in Sonora, home state to the company’s top mines, and 815 million for major new electricity lines for the Baja California peninsula.
Grupo Mexico Vice Chairman Xavier Garcia de Quevedo detailed nearly 9 billion dollars in investments through 2027; including a previously announced 2.8 billion for its proposed El Arco copper mine, which would anchor the Baja power investment. The rest will be spread over additional infrastructure, two other mines and new zinc refining capacity.
Garcia de Quevedo, who has spent five decades at the company controlled by Mexico’s second-richest man, minimized suggestions that political risk could derail the company’s investment plans.
While the two-year-old administration of leftist President Andres Manuel Lopez Obrador has shown mixed support for mining, Garcia de Quevedo said the mining, rail and energy company’s plans have been discussed with senior government officials.
He said that this is something that the government knows very well, noting the projects require permits but no new mining concessions, and that they are confident in obtaining authorizations within a short period of time in the future.
The energy plans for Baja California would have a beneficial effect in El Arco as well as domestic and commercial power users in a region that includes the Los Cabos tourist hub, he said.
President Lopez Obrador deemed mining an essential sector last year amid a wave of pandemic-related business restrictions, but has been widely criticized by the industry for the slow pace of permits and approvals, attributed to spending cuts at his environment ministry, as well as a policy of no new concessions.
The president’s office did not immediately respond to a request for comment about the permitting process, the spending cuts and the policy on concessions.
Grupo Mexico, the country’s third-largest company by market capitalization, has mining operations across the Americas via its majority-owned Southern Copper Corp. It also has a major rail freight business in Mexico and a big presence in the country’s oil sector, transporting refined products for state-run energy company Pemex by both rail and pipeline.
The world’s fifth-biggest copper producer, Grupo Mexico’s overall copper output is expected to dip this year by up to 1.5%, on lower output from Peru, Garcia de Quevedo said, but new copper production was set to come online from key mines by the second quarter of 2023, including an additional 36,000 tons a year from its El Pilar mine in Sonora and 30,000 tons annually from Buenavista.
El Arco, further out, is due to produce 190,000 tons annually from 2027. The timing of the closer mines comes as copper prices have begun to soar and are forecast to go higher.
“We’ve always followed the philosophy of planning our investments on (the expectation) of low copper prices,” Garcia de Quevedo said, noting Grupo Mexico typically plans for copper at about $5,500 per ton, far below a recent all-time high over $10,700.
Benchmark copper on the London Metal Exchange was holding above $10,400 a ton on Tuesday. [MET/L]
Goldman Sachs has forecast that copper prices will likely keep climbing, averaging $9,675 a ton this year, $11,875 in 2022 and $12,000 in 2023. Grupo Mexico – owned by billionaire German Larrea, who criticized Lopez Obrador just months before his 2018 victory – won a contract along with Spain’s Acciona to build a stretch of the Maya Train tourist rail project, a top priority of the president that will connect beach resorts Cancun and Tulum.