Mexican Mining

[Lone Clone]

Mexico remains top mining destination despite royalties

By Samuel Williams - Wednesday, June 4, 2014

http://www.bnamericas.com/news/mining/mexico-remains-top-mining-destination-despite-royalties

Mexico remains a destination of choice for precious metals mining investment despite new royalties, Trevor Turnbull, director of gold and precious metals at Scotiabank, told BNamericas.

The country has retained its position as probably the best jurisdiction for gold and silver mining and exploration in Latin America, ahead of Peru and Central American countries, in spite of the taxes, which came into force in January, Turnbull said.

The royalties are a 7.5% tax on mining income, minus certain deductions, and a 0.5% gross revenues charge on precious metals mines.

"Mining companies are all disappointed in the higher royalty rates in Mexico now but no one's really walking away from the country," according to Turnbull.

"It introduces a slightly higher hurdle rate and makes Mexico slightly less competitive in the grand scheme of things, but I don't know that the balance has shifted that much."

MEXICO STRENGTHS

Mexico is unlikely to lose significant investment as a result of the royalties because of the mining culture and skills set the country offers, he said.

"If you set up a mine in Mexico, there is not just skilled labor but also engineers, geologists and professionals available to work," Turnbull said.

And despite its long history of mining the country remains under explored and offers strong geological potential, and is likely to continue to attract a major chunk of global exploration spending.

Exploration spending in Mexico fell for the first time in five years in 2013, down 22% to US$912mn, impacted by lower metals prices, industry chamber Camimex said in April.

However, the country retained its place as the fourth biggest jurisdiction for non-ferrous exploration, at 6% of the global total, behind Canada, Australia and the US. Mexico is the world's biggest silver miner and a top 10 gold producer.