Mexico’s gold production is down, with a 26% dip in June 2022, says the country’s stats agency INEGI. This isn’t just a seasonal dip, notes Jesus Huezo Casillas, a researcher from IPN.
The last similar drop was in May 2020 due to COVID-19. Then, the government stopped all mining. Mexico ranks eighth globally in gold output.
New laws are affecting the mining sector. Huezo mentions these laws have led to tighter rules.
Another issue is the halt in new mining permits, which limits the finding of new reserves.
Gold prices are also a factor. Currently, an ounce costs around US$1,944.
Huezo adds that prices depend on supply and demand and are now low, partly because of excess supply.
Safety issues and labor strikes are other concerns. In states like Durango and Zacatecas, insecurity scares off foreign investors.
Strikes, like one in Zacatecas, add to the woes. This strike alone cost about US$183.6 million in losses.
Looking ahead, more challenges could be in store. Huezo warns that if new permits are denied, finding new reserves will be hard.
This will lead to fewer jobs and less competition on the world stage.
“We see fewer job offers for our students because firms are cutting back,” says Huezo.
The long-term impact could hit global markets too. If these trends continue, we could see higher prices for everyday items like computers and cars.
Plus, new taxes that used to help local communities have now been pulled. To turn things around, Huezo suggests allowing more mining permits.
“This can bring in more money, create jobs, and ensure we have the raw materials we need,” he concludes.
Gold has always been important for Mexico’s economy. Historically, the country has been a top global producer of this precious metal.
Over the years, foreign investments fueled the sector, providing job opportunities and contributing to GDP.
However, past boom periods contrast sharply with the current slump.
Regulatory changes and social issues have shifted the landscape, casting doubts on the sector’s future.