Industry Trend Analysis - Security To Remain Key Threat - JUNE 2016
BMI View : The high level of cartel violence in Mexico ' s northern states will remain the key risk to our positive mineral production growth outlook, as projects may face delays and mines may increasingly experience operational disruptions.
We maintain a positive outlook for Mexico's mining industry growth, predicated on a strong project pipeline, low operating costs and vast mineral reserves. Furthermore, the country's geographically strategic proximity to the US, where we forecast solid economic growth, will support demand for Mexico's precious metal exports over the coming years.
We forecast Mexico's mining industry value to increase from USD15.7bn in 2016 to USD17.8bn by 2020, averaging 3.3% annual growth. Strong silver, gold and copper production growth forecasts underpin this view. For instance, in Q116, Southern Copper, a subsidiary of Grupo Mexico, reported a 67.6% increase in production at the Buenavista mine and will continue ramping up production as part of the USD3.5bn expansion, reaching 460 thousand tonnes (kt) in 2016 and 500kt by 2017. Buenavista, which accounted for an estimated 65.3% of Mexico's total copper output in 2015, will drive the country's copper production growth over the next few years.
|Precious Metals, Copper To Drive Growth|
|Mexico - Mining Industry Value (USDbn) & Select Mining Production Growth (% y-o-y)|
|e/f = BMI estimate/forecast. Source: National sources, BMI|