Mexican Mining Sector Rebounds as Lockdown Eases

The lockdown resulting from the ongoing pandemic has affected many sectors globally, with the natural resource sectors in various countries experiencing major losses. In Mexico, September figures show signs of improvement as the sector stabilized.  According to Inegi, a statistics agency, activity in Mexico’s mining sector increased by 1.8%,in comparison with August 2019’s activity.

Earlier in the year when mines were suspended in April and May to comply with restrictions brought about by the pandemic, contractions of 25.1% were recorded in April and 17.8% in May. June saw operations increasing, as mining was declared to be an essential industry. Growth in the mining industry in June recorded an increase of 2.2%, with July showing more promise at 6.3% growth. Mining activity decreased by 7.7% in this year’s January–September period when compared to the same period in 2019.

However, August recorded a 1.1% decrease, right after the sector began to rebound and an overall decline in mine production of 3.7%, with the production of silver and gold decreasing when compared to August 2019 production. This is despite the increase in output of key industrial metals such as lead, zinc and copper.

Mexico is a top-10 miner of zinc, lead, copper and gold, and is the largest producer of silver globally. The country’s production of fluorspar increased to 96,613 tons, which is equivalent to 14.9%. The production of copper, lead and zinc increased by 0.9%, 15.8% and 28.2%, which equates to production of 40,340 tons, 13, 979 tons and 26,818 tons respectively.

On the other hand, silver and gold, as mentioned above, declined by 4.5% and 8.9%, which led to the production of 314, 825 kg of silver and 6,036 kg of gold. Gypsum, sulfur and noncoking coal also decreased by 6.5%, 7.2% and 7.8% respectively, leading to a decreased production of 422,912 tons, 31,589 tons and 498,075 tons.

The growth registered in production in the months of June and July was mainly because of weak production in both months in 2019, when output decreased by 9.6% and 6.5%. Mining companies have recorded production rebounds in this year’s third quarter in comparison to the production levels in the second quarter. However, pandemic-related protocols, which may require the number of workers on a site to be reduced, may affect mining operations for a period of time.

A notable mining company that you should watch is Energy Fuels Inc. (TSX: EFR) (NYSE American: UUUU). This Colorado-based firm specializes in producing vanadium and uranium, and the company also has interests in other verticals, such as rare earths and land clean-up.

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