2010-072 Business opportunities in the Mexican dairy industry
The Mexican Economy and Investment Opportunities: Why ...
Transcript of The Mexican Economy and Investment Opportunities: Why ...
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The Mexican Economy and
Investment Opportunities:
Why Mexico? Why Now?
Mexico, your best mining investment opportunity
Lorenza Martinez Trigueros
July, 2011
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Why is Mexico the best mining investment opportunity?
Strong economics
Mining potential
Mining rule of law
Efficiency in operation
Foreign Direct
Investment
Major scale mining
projects
Production Growth
1.
2.
3.
4.
Results
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Strong economics
Mining potential
Mining rule of law
Efficiency in operation
1.
2.
3.
4.
Why is Mexico the best mining investment opportunity?
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Source: INEGI
Real GDP
(Annual growth rate)
Strong recovery and macroeconomic stability
Annualized growth
2010: 5.4% 2009: -6.1% 2008: 1.2% 2007: 3.3% 2006: 5.2%
Economic Global Activity Index (IGAE)
(Annual growth rate)
The Mexican economy has maintained annual growth rates above 4%,
higher than those observed in recent years.
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Source: Banxico
Strong recovery and macroeconomic stability
Source: Bloomberg
EMBI + Index
Inflation remains in line with the inflation target. The country risk compares
favorably with other economies and have stable levels. Consumption Price Index
(Annual variation; %)
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Strong recovery and macroeconomic stability
Despite the perceived slowdown in the U.S. and the World, Mexico is in a
situation less vulnerable than other countries.
Macroeconomic Environment 2010-2011
(Score and Ranking)
Source: World Economic Forum. The Global Competitiveness Index:
Basic Requirements
Emerging market overheating index, 2011
Source: The Economist
0 20 40 60 80 100
Argentina Brazil Hong Kong India Indonesia Turkey Vietnam Singapore Thailand Egypt Peru Philippines Chile China Colombia Poland Saudi Arabia South Korea Venezuela Russia South Africa Czech Republic Mexico Pakistan Taiwan Malaysia Hungary
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Competitiveness Advantages in Mexico
1. Geographic
Location
Large U.S. border and coast both at the
Pacific and Atlantic Oceans
2. Preferential
access to foreign
markets
11 FTAs with 43 countries and an approved
legal framework with major trading partners
3. Skilled and
competitive labour
force
Skilled workforce at relatively low cost,
managerial skills and cultural affinity
4. Demographic
window
In the next three decades, the number of
economic dependents will reach a record
minimum (2025)
Mexico enjoys great advantages to compete in the global market
Attractive FDI destination
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Source: AT Kearney, 2010
In the long run, developing countries will outpace G20 advanced
economies Projected average annual GDP growth rate
(% 2009-2050)
Attractive FDI destination
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Strong economics
Mining potential
Mining rule of law
Efficiency in operation
1.
2.
3.
4.
Why is Mexico the best mining investment opportunity?
Mining Potential
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Mining is a strategic sector in the Mexican economy
Mexican mining as GDP % *
(Percentage)
* Does not include oil and related items
Source: Bank of Mexico
Mining Trade Balance*
(MUSD)
* It refers only to mining extractive, not mining expanded
Source: Ministry of Economy
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Mining is a strategic sector in the Mexican economy
Sources of foreign income
(MUSD) Mexican mining exports
(MUSD)
2003 – 2010
Avg. annual
growth rate: 19.2%
Source: Bank of Mexico
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Mineral Global
Position
Production
(Ton)
Fluorite 2° 1,067,386
Bismuth 3° 982
Lead 5° 192,062
Salt 7° 8,430,562
Molybdenum 5° 10,849
Celestite 3° 31,429
Silver 1° 4,410,749
10° 79,375 Gold
Mexico ranks in the top positions as a worldwide producer country for several minerals
Source: Statistical Yearbook of Mexican Mining 2010 (Ministry of Economy.- General Direction of Mining). INEGI.
Zinc 7° 570, 004
Copper 12° 270,136
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Source: Mexican Geological Survey
Mexico´s Mining Potential
23 giants world class
deposits and 6 super-giants
70% of the national territory contains geological mining features that are
economically workable.
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Strong economics
Mining potential
Mining rule of law
Efficiency in operation
1.
2.
3.
4.
Why is Mexico the best mining investment opportunity?
Mining rule of law
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How do concessions work in Mexico? Who can participate?
Who?
How?
Mexican citizens and national companies,
ejidos, agrarian communities and
communes, and native communities. In the
case of companies, they must be
incorporated in Mexico.
Prior restrictions on foreign investment have
been eliminated. Participation in 100% of the
stock of mining corporations/companies is
now possible.
Concessions are granted over free land
(according to mining law) pursuant to the
first in time, first right principle.
The term of mining concessions is 50
years, and it can be extended for other 50
years.
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Reforms have been made to strengthen the legal framework and
to facilitate the operation
2005: Approval of a single concession for exploration and
exploitation
Before there were two separated concessions; one for
exploration activities and other for exploitation.
Today, one single concession is for both activities, which gives
the concessionaire legal certainty.
2006: Mine gas is allowed to be consumed or to be sold to
PEMEX (coal bed methane, or unconventional gas)
Before, there did not exist any legislation about the use of the
mine gas, so this resource was wasted to the atmosphere.
Today, legislation allows the rational and regulated use of the
unconventional gas.
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The Mexican Mining Law provides certainty to concessionaires
with well-defined rights and obligations
To carry out works
To dispose of mineral products
obtained from such works
To obtain the temporary
occupation of the lands required
to carry out the works and the
disposal of dumps and tailings
To transfer concession title or
assign rights to persons legally
permitted
To segregate or consolidate
mining lots
To waive title and rights derived
from mining concessions
OBLIGATIONS
To execute and to demonstrate
works regulated by the mining
law in terms and conditions that
the mining law and its regulation
establish
To pay mining concession fees
To comply with technical safety
and environmental standards
To allow inspection visits from
the Ministry
RIGHTS
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Strong economics
Mining potential
Mining rule of law
• Information
• Promotion and facilitation
• Financing
Efficiency in operation
1.
2.
3.
4.
Why is Mexico the best mining investment opportunity?
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Easier access to georeferenced
information
Mineral property
Geology
Geochemistry
Geophysics
Mineral deposits
Infrastructure
Satellite image
Natural reserves Benefits:
Transparency and validity in the query
Significant savings: time and resources
Cutting-edge technology
http://www.sgm.gob.mx/index.php?option=com_content&task=view&id=165&Itemid=161&seccion=Geociencia
To facilitate business decisions, the Mexican Geological Survey
has developed a state of the art system, that includes:
• Information
• Promotion and facilitation
• Financing
Efficiency in operation
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In order to promote and facilitate investment,
specific projects have been developed
A complete
reference with all
the governmental
entities involved
and their respective
requirements
Procedure Advice:
Support throughout
the mining
paperwork
procedure.
Easier
administrative
process for the
mining
companies
Support and
supervision of the
mining investment
and all the
difficulties
presented in the
mining projects
development
Mining paperwork
guide
Automation of the
process of granting
mining concessions
Inter – Ministerial
Group
• Information
• Promotion and facilitation
• Financing
Efficiency in operation
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Specialized Financing Mining Entity
1. Promoting private capital funds in mining
2. Developing a program of double listing for mining companies
with the TSX and BMV
3. Granting loans to the productive chain of the mining sector:
Almost 2.5 billion dollars in the last 4 years were granted
Almost 15 mining districts were reactivated
Credits up to $30 million dollars (syndicated with a bank)
4. Supporting the small and medium mining companies with
training and technical assistance
Fideicomiso de Fomento Minero (FIFOMI) is a specialized entity that
funds mining projects, by:
• Information
• Promotion and facilitation
• Financing
Efficiency in operation
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Foreign Direct
Investment
Major scale mining
projects
Production Growth
1.
2.
3.
4.
Why is Mexico the best mining investment opportunity?
Results
Strong economics
Mining potential
Mining rule of law
Efficiency in operation
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Mining investment participation in FDI
(MUSD)
Source: Ministry of Economy
The mining investment has been dynamic and it is expected to
keep this performance
Mining investment
(MUSD)
Source: CAMIMEX. 2012 forecasted.
Accumulated
2001-2006
5,159 MUSD
Accumulated
2007-2012
21, 201 MUSD 2003 – 2010
Avg. participation rate:
10%
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Source: Metals Economics Group
Exploration Ranking: Top 10 Countries in 2010
Latin American exploration investment share
(Percentage) Global exploration investment share
(Percentage)
1% 1% 1% 2%
6%
10%
12%
19% 20%
23%
0%
5%
10%
15%
20%
25%
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Gu
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Co
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Arg
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Bra
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Ch
ile
Pe
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Me
xico
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Source: Gamah International, compiled by TMX Group.
MINING EXPLORATION PROJECTS OPERATED BY THE TSX and TSXV
Toronto Stock Exchange and The TSX Venture Exchange keep 60% of the
World Public Mining Companies
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Source: Ministry of Economy
As a result of the reforms in the Mining Law, the participation of
foreign capital has increased considerably. Mexico’s Exploration by Type of Company
(Percentage)
Source: Metals Economics Group
287
Foreign companies with mining exploration
programs in Mexico
(Number of companies)
72%
63%
43% 37%
31% 25%
29% 26%
37% 34%
11%
5%
8%
9%
7%
10%
9.5% 9%
15% 15%
17%
32%
49% 54%
62% 65% 62% 65%
48% 51%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Majors Intermediates Juniors
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Gold and Silver Production
Gold production
(Tons)
2003 – 2010
Avg. Annual
Growth rate: 19%
2003 – 2010
Avg. Annual Growth rate: 8 %
Source: Ministry of Economy
Silver production
(Tons)
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National activity continues growing
National territory granted for mining
activity
Source: Ministry of Economy
(Million hectars)
Only 13.8% of the national territory has been
granted to mining concessions.
National Territory Granted
Mining concessions
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Final remarks
Mexico is an attractive place for foreign investment, due to its
strong economics, mining potential, mining rule of law and
efficiency in operation:
1. Mexico ranks first in mining exploration investment in Latin
American, and fourth worldwide.
Mexico has become the 1st silver producer in the world
It has increased its gold production by 250% since 2003
2. 70% of the national territory contains geological mining
features that are economically workable, and only the 13.8%
of it has been granted
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The Mexican Economy and
Investment Opportunities:
Why Mexico? Why Now?
Mexico, your best mining investment opportunity
July, 2011