Boston, MA -- (SBWIRE) -- 07/26/2012 -- We expect Mexico's mining sector to experience steady growth in the coming years as mining companies are attracted to large precious and base metals resources. We forecast the value of Mexico's mining sector to grow from US$13.7bn in 2011 to US$15.7bn by 2016. We expect the bulk of this growth to come from precious metals mining as the world's largest silver producer continues to attract investment. The country will benefit from a stable business environment and favourable mining regulations, despite some uncertainty surrounding the upcoming presidential election. Mexico's Chamber of Mines (Camimex) estimates total mining investment in 2012 to come in around US$5.0bn.
Increases In Metal Production Ahead
While Mexico's mining sector will remain a relative laggard compared to Latin American peers such as Brazil, Chile and Peru, we expect exploration expenditures will reveal new deposits that will support the sector's long-term growth. Mexico's mining output will be driven primarily by precious metals such as silver and gold. However, we note the potential for large increases in lead and zinc as well as copper output over the forecast period as mine investment begins to diversify away from precious metals.
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Mexico's vast silver resources will allow it to remain the world leader in mined silver production over our forecast period. As key silver mining companies develop and expand mines, we forecast silver production growth of 5.0% in 2012, with total output reaching 207moz by 2016. Silver miner Fresnillo will remain a sector leader, accounting for roughly one quarter of Mexican production. Junior companies will also seek to develop small- to medium-sized silver mines as elevated prices and large silver resources attract attention from precious metals miners.
As precious metals miners uncover new silver deposits, we expect increasing attention will be focused on the discovery of promising gold mines as well. Though Mexico is not a major global gold producer, we believe the favourable business environment and existing silver mining presence could encourage strong growth in gold production in the coming years. Major global miners such as Goldcorp are already well established in the country and could be a key player in acquiring junior resource companies that are able to uncover economically attractive gold deposits. That said, the gold sector remains in the early stages of development, which could weigh on output growth going forward.
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