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The ongoing debate surrounding the Mining Law reform has once again brought to light the pressing concerns regarding the mining industry’s environmental impact. From water pollution to greenhouse gas emissions, these issues have garnered significant attention. However, it is crucial to acknowledge the industry’s remarkable strides in streamlining processes and improving environmental per formance.
With a focus on minimizing water consumption and reducing workplace accidents, companies are working to improve the industry’s reputation and its ability to attract investments with a conscious commitment to environmental sustainability. Still, more work remains to be done.
Communication experts have pinpointed the industry’s Achilles heel: communication strategies that fail to effectively convey the actions taken in mining projects to ensure a cleaner performance, including the incorporation of artificial intelligence (AI), Internet of Things (IoT) and machine learning (ML) capabilities.
During Mexico Mining Forum 2023 ECHO, experts delved into the significant aspects of new mining regulations, including the reduction of mining concessions, the importance of adopting cutting-edge technologies such as AI and ML and the improvement of communication strategies between the mining sector and society through digital channels.
Experts also focused on the priorities of silver producers, emphasizing the need for enhancing sustainable practices and addressing the projected shortage of this valuable mineral, as mining and other industries move toward the energy transition. In the case of lithium, experts underscored the importance of establishing a regional typification to ensure fair prices and foster the development of a regional supply chain.
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• ABB Mexico
• Advantage Austria Mexico
• Aggreko
• Agnico Eagle
• AIMMGM
• Altaley Mining Corp.
• American Chamber of Commerce of Mexico
• AMTEX CO r P
• AQUAFIM
• Argonaut Gold
• Auramet
• Ausenco
• AUSTr ALIAN Tr ADE & INVESTMENT COMMISSION
• British Embassy
• Bureau Veritas Mexicana
• Business Finland
• Business France
• Candidate
• Cimesa
• Clariant
• Compañía Minera Pangea
• COMSA
• Contacto en Medios
• CrIBAS
• CS SHELL & QUAKEr
STATE MEXICO
• CTA
• CyPlus Idesa
• Datamine Software
• Delegación General de Québec
• DICISA
• Embajada de Bélgica (AWEX)
• Embajada de Francia
• Embassy of Canada
• Energyby5
• Er M
• Fabriser
• First Majestic SIlver Corp.
• Fitch ratings
• FLSmidth
• GENETEC
• GEOSErVIX / AIMMGM
• Gladio
• Government of the state of sinaloa
• Grupo México
• Grupo Multisistemas de Seguridad Industrial
• Grupo V ySISA
• Gustavson Assoc.
• Halliburton
• HITACHI ENErGy
• HOLCIM MEXICO
• Iberdrola
• IM r Bonanza
• Israel Economic Office
• KOTr A
• KPMG
• Latin American Lithium Chamber
• Llorente y Cuenca
• LLyC
• Loadscan
• LONGi
• LUXEM
• M2mcertified Inc
• M3 Mexicana
• MACLEAN ENGINEErING
• MAG Silver
• McKinsey & Company
• MCNET Broadcast
• Metso
• Microsoft
• Mina La Paistera
• Minera Frisco
• Minerales del Sur
• Minería responsable Consultores
• Minesense technologies
• Monarca Minerals, Inc.
• Moody’s Investors Service
• Morba Supplies
• New Zealand Trade and Enterprise
• Orica
• Outcrop Silver and Gold Corp.
• OutletMinero
• PEÑOLES
• Polaris
• ProChile México
• QHE LOGISTICS MEXICO
- LANDSTAr
• renta NG
• resiter
• riverside resources Inc
• SAMSON Mexico
• Sandvik
• Secretaría de Desarrollo Económico de Hidalgo
• Secretaria de Desarrollo Económico del Edo. De Durango
• Secretaría de Economía
• Seequent
• SIEMENS
• Sitsa
• Sixense Mexico
• Slik
• Solenis
• Solensa
• SPM Mineria
• Sumitomo Corporation
• Tête à Tête Consultores, S.C.
• The Silver Institute
• Timken
• Torex Gold
• UNODC
• Vera & Asociados
• Vizsla Silver Corp
• VrIF y
• Weir
• WorldWise Consulting LLC
09:00
MINING POLICY: THE WHY AND HOW OF THE MINING LAW REFORM
Speaker: Martín González, Ministry of Economy
09:30 IS MEXICO STILL AN ATTRACTIVE MINING INVESTMENT DESTINATION?
Moderator: Carlos Fiorillo, Fitch ratings
Panelists: Armando Ortega, CANCHAM
Alfredo Phillips, Argonaut Gold
Salomon Amkie, Citi
10:30
SAFETY FOR MINES WITH RETURN ON INVESTMENT
Speaker: Mario Salomón, Multisistemas de Seguridad Industrial
12:00 THE DIGITAL JOURNEY OF THE MINING SECTOR AND ITS IMPACT ON THE SUSTAINABILITY OF THE BUSINESS
Speaker: Carmen Gardier, LLyC
12:25 DIGITAL ESG RISK MANAGEMENT FROM PIT TO PORT
Panelists: Mario Jara, Datamine
Claudio Silveira, Datamine
12:45 PURSUING COST EFFECTIVENESS AND PRODUCTION OPTIMIZATION IN A DIGITALIZATION ENVIRONMENT
Moderator: Rafael Scott, McKinsey & Company
Panelists: Adrián Márquez, VMX Minepro
Eduardo Francisco Castro, Weir Minerals Mexico
Fernando Gómez, MineSense
Marco Nieto Vázquez, Baker McKenzie
15:15 WHAT ARE THE PRIORITIES OF MEXICO’S SILVER MINING INDUSTRY?
Moderator: Armando Alatorre, CIMMGM
Panelists: Salvador García, Starcore International Mines LTD
Carlos Alberto Silva Ramos, Santacruz Silver
Jesús Velador, Vizsla Silver Corp.
09:00 LEVERAGING TECHNOLOGY TO OPTIMIZE THE MINING INVESTMENT ECOSYSTEM
Speaker: Steve de Jong, VrIF y Technology
09:30 DIGITAL SUSTAINABLE MINE OF THE FUTURE
Speaker: Joseph Starwood, Microsoft
10:00 MINERAL EXPLORATION: THE GEOLOGIST VS ARTIFICIAL INTELLIGENCE AND MACHINE LEARNING
Moderator: Don Hulse, Forte Dynamics Inc.
Panelists: John-Mark Staude, riverside resources
Katharina Pfaff, Colorado School of Mines
Roman Teslyuk, Earth AI
12:00 HOW ESG IS RESHAPING INVESTOR DECISION-MAKING
Moderator: Alexander Braune, Er M
Panelists: Alexandra Almenara, Ausenco
Mariona Oliva Escudé, WSP
Bernarda Elizalde-Andrews, Centre for responsible
13:00 RENEWABLE ENERGY AND ELECTRIFICATION PUT SUSTAINABILITY STRATEGY INTO ACTION
Moderator: Manuel Rubio, Grupo México - Infrastructure Division
Panelists: Ramón Moreno, Mitsui & Co. Power Americas
Alfonso Caso, AOSENUMA
Faysal Rodríguez, Torex Gold
René Valle, MacLean Engineering
14:00 THE RACE FOR LITHIUM LATINAMERICA
Mineral Development (r MD)
Speaker: Pablo Rutigliano, Latin American Chamber of Lithium
MINING POLICY: THE WHY AND HOW OF THE MINING LAW REFORM
The reform of Mexico’s Mining Law represents a significant advance in the regulation of mining activities, seeking to safeguard human rights and preserve the environment. The incorporated changes reflect a more inclusive approach, considering social impacts, promoting the participation of indigenous peoples and Afro-Mexican communities and encouraging equitable distribution of economic benefits.
“The objective of implementing the framework outlined in the 2030 Agenda is to eradicate poverty,” says Martin rafael González, General Director of Mining Development, Ministry of Economy.
The Mining and r egional Development, as well as the Second Legislative Studies committees of the Senate, approved without changes the bill that reforms the Mining Law, resulting in substantial changes to the regulation of mining activities in Mexico. This reform has modified a total of 45 articles, with the addition of 15 new provisions and the removal of four previous ones. The reform also includes a chapter that focuses on notifications and another that addresses mining-related offenses, explains González.
The reform is guided by core values, including the protection of the rights of indigenous peoples, the preservation of
the environment and the guarantee of the right to health and access to water resources.
The main changes in the Mining Law focus on addressing the social impacts caused by mining activities, including those that occur during exploration and exploitation of mineral resources. Moreover, the reform promotes equitable distribution of the resources generated by the mining industry, ensuring that economic benefits are fairly shared at the national level.
The reform also mandates a prior consultation with indigenous and Afro-Mexican peoples and communities. The consultation must be free, informed, culturally appropriate and conducted in good faith. This measure guarantees their participation in decisions affecting their territories and rights, recognizing their importance and valuing their perspectives.
“The reform embodies the essence of three international legal instruments, namely the International Labour Organization (ILO) Convention No. 169, the United Nations Declaration on the r ights of Indigenous Peoples, and the American Declaration on the rights of Indigenous Peoples,” says González.
The length of mining concessions has also been modified from 50 to 30 years, with the possibility of two extensions of 25 years each,
subject to participation in the corresponding processes. This aims to encourage greater competition and participation in the mini ng sector.
The reform also establishes stricter measures in terms of worker safety, explains González. It includes the appointment of an engineer responsible for compliance with safety regulations, while reducing the deadline for reporting accidents. It also considers the suspension of operations in case of non-compliance with safety regulations. Failure to adhere to safety standards protecting workers is also classified as a crimina l offense.
Environmental protection is a crucial component of the Mining Law reform. Mining concessions are now conditioned upon water availability. Moreover, concession holders are obliged to design a mine closure plan that ensures the proper restoration of affected areas. “While not groundbreaking, from a social standpoint,
this plan is being proposed for the first time,” says González.
The reforms also included the modification of other laws, including the National Water Law, the General Law on Ecological Equilibrium and Environmental Protection and the General Law on the Prevention and Integral Management of Waste. These changes aim to strengthen the protection of human rights and the environment within the context of mining activities.
Opposition to the Mining r eform has intensified in recent months. Legislators have filed an action of unconstitutionality to suspend the Mining Law, as they claim it violates the congressional process. Meanwhile, several mining companies have filed judicial appeals against it. First Majestic Silver became the first company to obtain a provisional injunction against the Mining Law reform. The provisional suspension is the first of many legal disputes expected from other mining companies affected by the reform.
IS MEXICO STILL AN ATTRACTIVE MINING INVESTMENT DE STINATION?
While Mexico is a key mining producer and has the reserves to remain so for a long time, the country has seen a contraction in foreign direct investment (FDI) for the mining industry in recent years. To counter this trend, mining experts call for legal
certainty and policies that allow the industry to continue growing.
The mining sector is a fundamental pillar of the Mexican economy, contributing 2.3% of the national GDP and 8.1% of the industrial
GDP. The Ministry of Economy has highlighted the international importance of Mexico as a mining jurisdiction and a leading producer of silver, as well as an important producer of other precious and industrial metals.
Mexico ranked as the largest silver producer in the world in 2022, according to the Silver Institute’s Silver Survey 2023. The country had an output of 199.2Moz in 2022, representing a 2% increase against 2021 and almost 25% of the global silver production. Fur thermore,
US$2.8 billion recorded in 2021. CAMIMEX highlights that US$4.8 billion was invested in the entire mining-metallurgical sector in 2021. FDI projections for 2023 are less than ideal due to the recently approved mining reforms, which have generated concern among i nvestors.
“Overall legislative certainty will play a vital role in the mining industry. Potential investors are constantly looking for political signals that offer an idea of what the future holds in terms of policy and legislation changes,” says Alfredo Phillips, Vice President, Argonaut Gold Inc. Canadian mining companies in Mexico have expressed concern about the decrease in investment due to current restrictive reforms and are looking for certainties that allow them to foresee future risks.
Mexico’s mining attractiveness stems from its geopolitical location and numerous mining assets. “Most of the country is filled with potential mining assets. In fact, less than 40% of them have not been explored and exploited. This variety of assets puts Mexico at an advantage since it remains attractive for investors,” says Ortega.
Despite Mexico’s attractiveness as a mining jurisdiction, FDI decreased 66.5% in 2022, reaching US$1.6 billion versus the
The lack of legal certainty could have longterm repercussions for the mining industry. “Not granting new concessions will bring the stagnation of the mining sector as a consequence, and today we are beginning to feel the effects of the absence of new mining projects. Of those projects operating in the country today, most are mine expansions and not new mines. This is generating serious repercussions,” says Karen Flores, Director, Mexican Mining Chamber (CAMIMEX). The chamber pointed out that the government’s stance caused 181 foreign companies to leave the country in 2021. Furthermore, 822 projects have been delayed due to the lack of permits granted.
“Recent studies have estimated that from 2023 to 2030, Mexico might have US$20 billion new investments ready to kick off, if renewable energy conditions are met”
Armando Ortega President Mining Task Force | CANCHAM
In April 2022, the Mexican government also nationalized lithium exploration and exploitation, backed by the Sonora Plan, which aims to transform Sonora into a clean energy hub. To make the plan happen, the government announced a US$48 billion investment to strengthen the Sonora-US supply chain through the promotion of battery and EV manufacturing. The plan also considers the construction of clean energy power plants, including Latin America’s biggest solar plant in Puerto Peñasco. However, some in the private sector have questioned the government’s ability to boost commercial lithium production.
According to Phillips, Mexico’s nationalization of lithium mining “has had a negative impact, as it sends the wrong signal to the investment community.” He argues that reserving the exploration, production and distribution of lithium to the Mexican government may have a negative effect on the industry, since Mexico currently lacks the financial resources, expertise and technology
needed to boost commercial lithium production.
In terms of potential, Mexico’s reserves look promising. Bolivia ranks first in terms of the largest lithium reserves with 21 million t, followed by Argentina with 17 million t, Chile with 9 million t, Australia with 6.3 million t, China with 4.5 million t, Congo with 3 million t, Germany 2.5 million t and in ninth place, Canada and Mexico with 1.7 million t each, reported the US Geological Survey. To capitalize on its reserves, Mexico will need to take advantage of the current technology and attempt to keep with the growing trends. Moreover, “technology will help find mining assets in ways that are less costly for companies and disruptive for the environment,” says Ortega.
In addition to the opportunities offered by lithium, experts agree that investment could be enhanced by better ESG performance. Although ESG issues have been increasingly integrated into mining strategies, decisionmaking, projects and reporting, many companies lack adequate ESG parameters, which could lead to underinvestment and closure of operations. “Nowadays, no one will ever invest in a new massive mining plant in Mexico if it is not sourced with renewable energy,” says Salomon Amkie, Head of Specialized Industries and Structured Finance, Citi.
The ESG issues expected to be prioritized by investors include water management, decarbonization, green production, emissions and diversity, among others. However, water supply could pose a problem as “current investors do not have the sensitivity needed to address the relevance of water harvesting within the mining sector,” says Amkie.
Mexico’s mining industry possesses immense potential but a concerted effort is required to address its challenges and concerns. By providing legislative certainty, encouraging foreign investment, leveraging technology and improving ESG performance, Mexico can secure its position
as a globally competitive mining jurisdiction, while driving sustainable and responsible
mining practices for the benefit of its economy and environment.
SAFETY FOR MINES WITH RETURN ON INVESTMENT
Insecurity is one of the most common issues companies face in Mexico and mining is one of the economic sectors that suffers the most from this problem, as theft of equipment and processed minerals are all too common. Industry insiders believe that insecurity will remain an issue in 2023 and under these circumstances, businesses must embrace holistic, well-thought strategies to protect themselves.
Criminal activity exerts a direct influence on businesses nationwide. According to Mario Salomón, Country Manager, Multisistemas de Seguridad Industrial, about 1.2 million economic entities fell victim to crime in 2021. This figure accounts for 24.6% of the total economic entities, roughly a quarter of all businesses. Prevalent crimes in Mexico include: extortion, accounting for 28.9% of incidents; theft of merchandise, goods or supplies, accounting for 19.7%; petty theft, accounting for 12.9%; and theft of merchandise in transit, accounting for 7.3%.
According to CAMIMEX, the mining sector has been a constant target for thieves,
leading to an increase in operational costs of between 10% and 20%. The chamber adds that the figure could be bigger taking into account that mining companies must heavily invest in personnel training and hire more security guards. The most affected operations are those in the states of Zacatecas, Sonora, Durango and Guerrero.
Faced with this problem, Grupo Multisistemas de Seguridad Industrial emphasizes that private security systems are the best protection and surveillance solutions to prevent, detect and control risk situations in a company. The security offered depends on the company’s situation, ranging from security cameras to trained personnel, with many options i n between.
Private security systems reduce the possibility of theft and vandalism, not only protecting assets but also employees. It also reduces costs in the long term because no goods are stolen, operations are not interrupted and critical data is not lost.
The physical infrastructure of the site itself is a crucial component, requiring the implementation of security measures based on a comprehensive analysis, explains Salomón. Subsequently, the primary focus in countering criminality is prevention, which constitutes 80% of security operations. Preventive measures are crucial to avoid being perceived as a vulnerable target by criminals. Deterrent methods to dissuade criminal activity account for 15% of the overall strategy. Finally, responsive measures make up the remaining 5%, representing the least desirable outcome. However, it is vital to be prepared to react to vulnerabilities to protect the personnel and business.
All industries have increased their security costs, which are considered a necessary inconvenience, says Salomón. The mining sector increased its security costs by about 10% from 2020 to 2021, recognizing the importance of investing in security. However, investments sometimes are not enough to tackle the main security problem the industry faces.
“In Mexico, companies typically invest about 4% to 5% of their operating costs in security, while in the US, this expense represents approximately 9% despite having lower security challenges”
Mario Salomón Country Manager | Multisistemas de Seguridad IndustrialSecurity investments are crucial, as the cost of prevention measures is often significantly lower than the expenses incurred in the event of a crime taking place. Moreover, in
the event of a reactive situation, the cost of appropriately responding to a criminal incident is typically lower than the cost of allowing the incident to occur without a proper response, explains Salomón.
When selecting a security provider, Salomón urges companies to carefully analyze their financial, legal and technological needs so security becomes an asset rather than an expense. Security providers must count with the best technology, the best processes and the best human resources. The return on investment is guaranteed through the implementation of protocols, appropriate human resources and an effective prevention strategy.
Security providers must also meet essential characteristics that demonstrate their capacity for prevention and response. According to Salomón, there are over 10,000 private security companies in Mexico, of which 8,000 are not professional, as they lack the necessary characteristics to provide quality service. These characteristics include federal security permits, membership in reputable security associations, proper labor practices, compliance with legal records and licenses, among many other legal requirements that ensure a security company is legitimate and prepared.
Grupo Multisistemas de Seguridad Industrial has more than 40 years of experience in the private security sector and offers customized solutions for each company, depending on its size, location and needs. The company’s solutions include stateof-the-art technology, trained personnel and advanced equipment that meet all customer needs.
HELPING THE MINING SECTOR IN ITS DIGITAL JOURNEY
Digital communication and the digital journey have a great capacity to support the positioning of the mining sector in an increasingly complex environment. However, most mining companies have not used these tools effectively to generate conversations and amplify
messages that change the sector’s highly stigmatized image.
The mining sector must generate a new model of conversation, as some expect it will continue to be targeted by the Mexican government as part of its political strategy
toward the upcoming 2024 electoral process, explains Carmen Gardier, Senior Director of the Digital Area Latin America, LLyC .
The conversation about the mining sector on social media often revolves around mining legislation, concessions and reform of the mining law. According to LLy C, 42% of the conversation on social media is related to the reform of the mining law, which has polarized the conversation due to the restriction of permits within the sector. This reveals distrust within society toward mining, as well as the gap that the mining sector is leaving open for this narrative to continue growing.
Director ofThe success of any company depends on communication, knowing how to listen and establishing relationships based on listening and conversation. However, generating conversation in the mining industry has been difficult due to the fear that the main actors have of being criticized.
The political scenario for the mining sector in Mexico is uncertain, as many in the industry are concerned by the Mexican government’s refusal to grant new mining concessions and the elimination of the Mining Deputy Ministry. Others are concerned about potential tax increases on mining activities. Additionally, political agendas at some ministries could be a risk for the mining sector due to positions contrary to extractive activities. Moreover, the public security crisis represents a threat to the functionality and operability of the mining sector in Mexico.
“There is a lack of voices in a positive conversation to position messages and to address this conversation,” says Gardier. Third-party profiles are helping to counteract this wave, but actors from the mining sector are still missing. According to an analysis of the top 20 mining companies in the country, only 65% of Mexican mining companies have a presence on social media platforms such as Facebook and LinkedIn and only 25% have a narrative based on topics that help change the perception of the sector.
Furthermore, only 25% of mining companies have CEOs and top executives with a social media presence, especially on LinkedIn, while only 10,000 employees have a presence on the same channel. Mining currently generates 417,000 jobs and all voices must be heard to continue generating conversation about the sector. “This is important because currently people trust individuals more than brands,” says Gardier.
“In the current context, it is important to converse, listen and position our messages in a close, human way that helps us, as it will become increasingly difficult to counter what lies ahead in the electoral period”
Carmen Gardier
Senior
the Digital Area Latin America | LLYC
Digital technologies are transforming society and connecting in this increasingly digitized environment is one of the major challenges the mining industry faces. The journey of digital communication has four stages: Digital Being, Digital Optimization, Digital Data Driven and Deep Digital. Mexico is positioned between Digital Being and Digital Optimization, where there is a lack of recurring measurement of strategy and digital analysis.
However, the digital transformation is not limited to social media accounts; there must be engagement with influencers, micro-influencers, opinion leaders, journalists and media outlets. Additionally, working with employees and using digital
spokespersonship is necessary to change the perception of th e company.
Data also allows for the identification of topics in which mining companies can be a reference, such as communities, mining innovation and technology, safety and the environment. Currently, there are over 8,000 monthly searches related to security and mining and over 1.5,000 searches related to innovation and technology.
Furthermore, to continue strengthening their communication strategy, CEOs, executives and employees must continue to generate trust and transparency by participating in conversations, as digital engagement helps increase promoters of positive conversation.
DIGITAL ESG RISK MANAGEMENT FROM PIT TO PORT
The shift toward sustainable practices is becoming more of a necessity than a choice. As a result, all industries are reinventing themselves to comply with the UN Sustainable Development Goals (SDGs) and ESG standards. The mining sector, which has faced misconceptions and biases regarding its environmental impact, can find in software and technology the tools to improve transparency and enhance its processes.
Mining operations generate jobs and opportunities for the communities surrounding them, but they can also have environmental drawbacks. “I grew up in a mining town, Chiquicamata, Chile. In Chile,
we are proud of our mining activity, but we also have to acknowledge that this activity has social and environmental impacts, and these are things we sometimes do not like to talk about,” says Mario Jara, Chief Innovation Officer, Datamine. ESG compliance in the mining industry benefits mining communities, while helping the industry become more resilient to change, he adds.
Promptly addressing ESG risks is essential for the mining industry worldwide. Moreover, increasingly stricter standards have made achieving compliance harder. Companies also have to engage in comprehensive record keeping and conduct inspections to achieve compliance goals. Software
as a Service (SaaS) providers are making their way into the mining sector, as their solutions can help companies collect and manage large volumes of data to support the decision-making process, while improving risk management and monitoring employees’ health and environmental regulation compliance.
Zyght, acquired in 2022 by Datamine, is an integrated management system that operates within a continuous improvement cycle. In it, the elements that need to be fulfilled are defined based on the parameters selected through inspection programs and established across all operations. By loading all work programs and incorporating cloud technology into mobile applications, all responsible parties can generate inspections, audits or specific data collection, creating crucial benefits for ESG risk management. “Zyght operates in the cloud. It is here, within the company, and each of the corporate standards, legal regulations and internal procedures are parameterized,” says Jara.
These solutions can assist companies in tracking environmental risks such as emissions, waste and energy consumption. Before being acquired by Datamine, Zyght’s strengths lay in reconciliation, metallurgical balance and mine planning, explains Jara. The software now encompasses crucial ESG compliance topics such as emissions measurement, environmental compliance, community relations, waste management, health and safety, contractor compliance
and more. Zyght can support the mining industry by providing it with the ability to have a fully digital overview of all operations, even eliminating the need for paper, and consolidating data and reports in one place that can be directly inspected by management.
A strategic and orderly overview of reports and data of the industrial site can ensure assurance of standards and regulatory compliance, bringing benefits such as reduction of fines, compliance with corporate standards, operational efficiency, reduction of paper use, insights from data analytics and legal and regulatory compliance.
Guided by ESG management principles, the mining industry can open up to new technologies that can amplify the benefits of digitization for the sector. In terms of governance, mining companies could benefit from the identification of risks and regulatory compliance, resulting in operational and business continuity, while ensuring cordial relationships with governmental offices. Technology can help mining companies in numerous ways, such as reducing its carbon footprint.
ESG risks exist across all industries, and it is crucial to understand the importance of digitizing processes that in most cases are already being documented. Zyght shares the belief that the mining industry can be a leader in safety and health standards. “This could be the driver of success for the mining business in the future,” says Jara.
PURSUING COST EFFECTIVENESS IN AN INFLATIONARY E NVIRONMENT
Comprehending the cyclical and structural factors that contribute to periods of economic shifts is essential to thrive in the mining industry, and to effectively counter emerging issues. Technology can be a key ally of mining companies, allowing this essential industry to remain competitive during challenging circu mstances.
“The mining industry is indispensable for the functioning of the world as we know it. While inflation and cost increases pose challenges, they are just a small part of the industry’s overall concerns”
Eduardo Castro Managing Director | Weir Minerals Mexico
During the past couple of years, Mexico saw a rapidly rising inflation that hit most productive sectors, including mining. While inflation is easing, companies must remain attentive to market changes and prepare to react accordingly. “To assess the economic impact on mining companies and ensure strong financial performance, it is essential to consider multiple factors and implement strategies that sustain good operational and economic standards,” says r afael Scott, Partner, McKinsey & Company.
Mexico recently recorded its lowest inflation rate since March 2021 at a rate of 5.18%, reports INEGI. This result suggests inflation might
maintain a downward trend throughout the year, potentially marking the end of over two years of unprecedented high inflation rates. These rates had impacted the performance of mining companies, which actively deployed strategies to overcome this challenge.
“Addressing the problem of currency depreciation, in our experience, has largely been focused on technology. Technology can generate greater efficiency in processes that even bring compliance benefits in the face of the significant wave of ESG responsibility that we are experiencing,” says Adrián Marquez, Director General, VMX MinePro.
In 2Q22, several mining companies were impacted by inflation and were forced to raise their cost guidance and lower their production guidance due to inflationary pressures that were driving up prices for key inputs, as previously reported by MBN. The main added costs impacting mining companies included reagents, explosives, diesel and energy, as well as operating and development costs. Under this scenario, the problem was aggravated by a decrease in mineral prices. In 2Q22, silver prices fell from the US$24-26/oz range to a low of US$18.27/ oz in July 2022.
Inflation is not the only economic problem that the industry faces, as it is the result of several factors that have been developing over the last four years at least, explains Marco Nieto Vázquez, Economist Director, Baker &
Mckenzie. ”Even before the pandemic, the world was facing a shift in the status quo that brought about a more protectionist economic outlook. However, this approach does not find a place in this new era where it is increasingly challenging for countries to isolate themselves,” says Nieto. The mining industry in Mexico and abroad faces another threat in the shape of legal uncertainty, which could also affect the sector’s competitiveness.
An effective way to combat price increases or currency depreciation is through a cost reduction approach, according to Fernando Gómez, Account Manager North America Mexico, MineSense Technologies. “One of the main issues we have encountered is the challenge of cost reduction, coupled with the very real problem that mining companies are not innovating,” s ays Gómez.
To offset increasing costs, some companies suspended or scaled back operations in certain mines to mitigate the impact of higher costs and lower-grade deposits. They reevaluated the value of shorterlife assets, considering the implications of higher cost assumptions. However, as technology becomes an evident answer for cost reduction, the mining industry faces another problem and it is its traditionalist approach to technology.
The mining sector must embrace innovations that can help it reduce costs while adhering to ESG goals. As the world moves forward with electromobility and other net-zero goals, the mining industry also has to work on effectively communicating its importance and its strategies to adhere to safety and environmental standards.
“As we witness the surge in electromobility, it becomes crucial to address the issue of scarcity. In addressing cost-related problems, technology can be a valuable ally, enabling more efficient processes and optimizing the use of resources and services. Furthermore, technology can play a pivotal role in tackling the pressing issue of energy efficiency faced by the country,” says Castro.
The industry has made a mistake by failing to work to shed the image of being a predatory industry, says Nieto. The industry has made significant efforts to maintain good practices, which led to the mining sector serving as an example when additional regulations were introduced for the hydrocarbon sector, he adds.
WHAT ARE THE PRIORITIES OF MEXICO’S SILVER MINING INDUSTRY?
Mexico has long been recognized as one of the world’s leading producers of silver, with a rich history deeply intertwined with the mining industry. The silver mining industry plays a crucial role in the national economy, contributing significantly to job creation and export revenues. However, the country needs to continue investing in
sustainability, exploration and technology to sustain its production levels, agree industr y experts.
The silver mining industry has played an unquestionable role in Mexico’s economic development. “During 80% of the past 120 years, Mexico has been the largest silver
producer in the world,” says Armando Alatorre, Vice President , CIMMGM.
In recent years, there has been a growing emphasis on environmental sustainability within the mining industry worldwide and Mexico’s silver mining sector is no exception. Mining companies in Mexico are increasingly prioritizing sustainable practices to mitigate environmental impact and promote responsible resource ex traction.
2023 is expected to be another solid year for silver demand, according to The Silver Institute. Industrial demand should reach an all-time high, boosted by continued gains in the market and healthy offtake from other industrial segments. Although bar and coin demand and jewelry demand are expected to fall short against last year’s exceptional levels, both are forecast to remain historically high. However, “despite having highly rich mines in the country, Mexico needs to continue exploring its geological assets in order to sustain its accustomed level of production,” says Jesús Velador, Vice President of Exploration, Vizsla Silver Cup.
Supply, by contrast, is expected to achieve low single-digit gains. As a result, this year will also see another large deficit of silver, amounting to a projected 142.1Moz, which would be the second-largest deficit in more than 20 years. “Global demand for silver has surpassed Mexico’s supply for the second consecutive year,” says Velador.
Embracing sustainability also opens the door to changing the negative perception that a significant part of the public has about the sector. “Practicing responsible mining can significantly improve the public perception of miners, leading to increased investor interest in the mining sector,” says Carlos Alberto Silva, CEO, Santacruz Silver Mining LTD. This negative public perception has provoked an active disdain toward an industry that keeps afloat countless others: “it is important to recognize that mining is the cornerstone of the world’s production chain,” s ays Silva.
To remain competitive in the global market, Mexico’s silver mining industry is prioritizing technological innovation and operational efficiency. Digital transformation, automation and advanced data analytics are being harnessed to optimize mining processes, reduce costs and improve productivity. Despite these advances, the human factor will continue to play an essential role. “What ensures productivity within the mining industry is the human personnel, not the technology employed by them,” says Silva.
“Currently, the biggest challenge the mining industry in Mexico faces is integrating sustainable measures that protect the environment and attract foreign investments”
Salvador García Director General | Starcore International Mines LTD
In recent years, there has been a growing emphasis on environmental sustainability within the mining industry worldwide. Mining companies in Mexico are making efforts to reduce water consumption, manage waste effectively and implement reclamation and rehabilitation programs to restore mined areas. Unfortunately, “as time goes on, the exploration of silver mines becomes increasingly complex,” s ays Silva.
As Mexico’s silver mining industry embraces sustainable practices, technological advancements and environmental stewardship, it positions itself to remain competitive in the global market and meet the rising demand for this precious metal. By prioritizing responsible mining and embracing innovation, Mexico’s silver mining industry can secure a prosperous and sustainable future, contributing to both economic growth and environmental well-being.
SIMPLIFYING MINING DATA TO BOOST MINING INVESTMENTS
In today’s data-driven world, the mining sector faces the challenge of effectively communicating complex information to stakeholders and potential investors. To bridge this gap, technology has emerged as a powerful ally, revolutionizing the way information is presented and understood.
V r IF y , a platform that leverages technology to simplify data sets, has emerged as an ally of mining companies by helping the industry engage stakeholders in more meaningful di scussions.
In the mining sector, conveying technical data and project results to stakeholders can be daunting. “We are not fully aware of the level at which our audience is digesting the information we are giving them,”says Steve de Jong, CEO, V r IF y Technology
The mining sector often struggles to strike a balance between showcasing technical
expertise and ensuring that stakeholders comprehend the presented information. “From a mining investment point, this shuts the door to a much broader investment base,” explains de Jong. By simplifying information, businesses can empower stakeholders to make informed investment decisions. V r IF y allows companies to transform vast amounts of data into an easily understandabl e format.
V r IF y acts as a bridge between all stakeholders, simplifying technical concepts and making them accessible to a wider audience. By translating complex data sets into a format that is easily digestible, V r IF y helps everyone grasp the intricacies of mining operations. This newfound understanding allows for more meaningful conversations, aligning investor expectations with the realities of the sector.
“The mining industry has traditionally relied on conventional formats, such as PowerPoint presentations, to convey information to stakeholders”
Steve de Jong CEO | VRIFY Technology
While those presentations may provide a comfortable and structured approach, they can often fall short in effectively capturing the attention and interest of modern audiences. As technology advances and stakeholders demand more engaging and accessible content, the greatest risk lies in not adapting to change.
VrIF y’s interactive tools provide a platform for stakeholders to actively engage and ask questions. This fosters transparency and ensures that all parties have access to the same information. By removing barriers to understanding, VrIFy paves the way for more informed discussions, enabling stakeholders to gain deeper insights into mining projects
and their potential returns. This transparency builds trust and confidence among investors, increasing the likelihood of attracting financing.
In addition to simplifying information for stakeholders and attracting investment, V r IF y ’s technology plays a crucial role in raising awareness about the impact mining projects have on local communities. By presenting data in a clear and accessible manner, V r IF y facilitates a deeper understanding of the effects mining operations can have on surrounding areas. This heightened awareness enables stakeholders, including community members, to comprehend the potential benefits and challenges associated with mining projects. V r IF y empowers communities to engage in informed discussions and make their voices heard, promoting a more inclusive and responsible approach to mining.
“The simpler we can make it the better conversations we can have,” says de Jong.
BUILDING THE DIGITAL, SUSTAINABLE MINE OF THE FUTURE
Amid a global environmental crisis, the mining sector must take action to improve on-site performance. However, companies must balance competing priorities: driving profitability, improving productivity and advancing sustainability, while protecting health and safety and maintaining their operating license. To enhance a mine’s environmental-focused programs, technologies like artificial intelligence (AI), cloud migration and the Internet of Things (IoT) are e ssential.
“The idea of the digital sustainable mine of the future combines the physical mines we know today with new ESG aligned business models and capabilities, enabled by an intelligent digital fabric,” says Joseph Starwood, Director of Industry Digital Strategy for Mining, Microsoft.
The path towards the digital sustainable mine of the future is a journey, not a
one-time event, explains Starwood. Furthermore, there is no consensus of what this mine looks like, but there are certain commonalities. “Most of the visions of this mine address topics such as safety, emissions, energy and water, as well as technological terms such as autonomous, digital and data,” says Starwood. The mine of the future has to be insight driven to respond to and even predict events , he adds.
All over the world companies are now applying technology in their daily operations. For example, Sweden-based mining and engineering equipment provider Sandvik developed a remote monitoring solution based on AI, IoT and predictive analytics. The tool used Microsoft Azure Cognitive Services, Azure Databricks, Azure Machine Learning, Azure IoT Hub and Azure Synapse Analytics to collect and analyze data from
equipment sensors and improve predictive maintenance. As a result, customers improved productivity, safety and reduced their emissions through fuel and energy efficiency.
The mining industry faces a challenging environment. First and foremost miners have to face the trilemma of how to operate profitably while becoming green and staying secure. Mining has to stay profitable while becoming greener, and the mine of the future addresses all of these aspects.
To address these challenges, the mining industry has to take into account numerous factors, making it impossible to rely on outdated systems, such as paper records and spreadsheets or simple applications. “The challenges of optimizing across the mining supply chain as well as the mine life cycle now exceeds our human capacity,” says Starwood.
When incorporating new technology into mining processes, companies must take a look at the reality of mining sites, which often are in remote areas with low physical and digital accessibility. Furthermore, mining operations are not static and working areas constantly change over the mine’s lifespan, which makes wired networks inefficient. To tackle these issues, private Multi-Access Compute (MEC) networks offer wireless connectivity, which at the same time offers flexibility and scalability. The adoption of MEC networks will make it easier for
companies to trace important data and improve environmental performance.
Interoperability plays a crucial role considering the multitude of factors that need to be monitored. Scalability also becomes increasingly essential, as numerous changes are anticipated for the industry until 2050, explains Starwood.
The mine of the future must prioritize resilience and security, not only in terms of physical and cyber aspects but also in its supply chain. The pandemic and the russianUkrainian conflict highlighted the vulnerability of the global supply chain, prompting a shift in the status quo. These challenges turned out to be more complex than initially anticipated, as macroeconomic factors influenced by global disruptions resulted in significant policy changes aimed at addressing inflation, further straining the mining industry. “Mining is torn between two opposing forces and since 2007 the cost of exploring has exceeded the value of the deposits discovered,” says Starwood.
Throughout this process, it is important for all stakeholders to participate in developing greener operations. Some companies are partnering with national network providers and governments, as well as local communities and indigenous peoples to install new modern data networks that benefit all. Where existing data network infrastructure is insufficient or unreliable, mining companies are also utilizing satellites as their backup data networks. “We will need to have an intelligence driven
organization that leverages a system intelligence layer to reason across a great quantity of data and provide insights to workers to drive the best decisions,” says Starwood.
To develop the required technology and infrastructure that will enable miners
to reach record energy, water and fuel efficiency rates, mining companies and software developers need to work closely to adapt their digital solutions to the sector’s needs. “To begin to close the gap, a solid digital foundation that delivers timely in context data and insights is required,” says Starwood.
MINERAL EXPLORATION: GEOLOGISTS VERSUS ARTIFICIAL INTELLIGENCE
Geology, once bound by traditional methods, is experiencing a seismic shift thanks to the integration of artificial intelligence (AI) and machine learning (ML). These cuttingedge technologies are unlocking a wealth of possibilities in the field, empowering geologists to analyze vast amounts of data, make accurate predictions and optimize decision-making processes.
“ML enables geologists to see a new vision, new sets of data and come up with new ideas that we had not thought of before,” says John-Mark Staude, CEO, riverside resources.
Several crucial properties must be considered during the analysis of geochemical data, including statistical distributions that deviate from normality, heteroscedasticity (unequal variances indicating different distribution modes), spatial non-stationarity models and the compositional nature of data. Accurately accounting for these factors is vital to ensure reliable interpretations and meaningful results in geochemical studies and exploration projects. AI
and ML algorithms play a significant role in handling these complexities and extracting valuable insights from diverse geochemical datasets.
Geology focuses a wire range of highly diverse data, from a continental scale to small, individual rocks. The challenge is to go from a larger scale to a specific scale to find a feasible target, that is one of the key areas where MI and AI can help. “Visualization software allows us to see huge amounts of data and filter it more rapidly, which in the end results in spending fewer days in detailing and more days in actually visiting potential deposits,” says Staude.
ML harnesses the power of geosciences through the recognition and utilization of complex patterns in high-dimensional data, enabling valuable inferences. Another significant advantage of ML is its capability to handle data variability, including that arising from utilizing multiple data sources. Through appropriate algorithm selection and careful control of model overfitting,
machine learning can effectively mitigate the effects of data variability and deliver reliable results.
Despite the advantages of these technologies, it is necessary to be careful with data inputs, as supervising and ensuring high-quality databases is of great importance to ensure accurate analysis. However, bada data is better than no data.
“It is important to note that low-quality data and obtaining biased results can also help companies in better training their algorithms,” says roman Teslyuk, Founder and CEO and CTO, Earth AI.
The main struggle when developing AI and ML applications is the lack of data. To address this issue, governments play a crucial role in generating and providing updated information. Geological surveys play a significant role in enabling databases to be analyzed. Those datasets are of great value to mining companies of all sizes, and would benefit mining projects in Mexico.
“Mexico should support and build databases to feed all the algorithms, understanding how different geological terrains respond. These things can drive these sciences to the
future,” says Don Hulse, Director of Business Development, Forte Dynamics.
The integration of AI and ML does not replace the expertise and insights provided by geologists, however. Instead, these tools complement human knowledge, enhancing exploration and analysis capabilities. Geologists have valuable domain expertise, geological intuition and contextual understanding that AI and ML algorithms lack. The collaboration between geologists and these intelligent technologies leads to more robust interpretations, improved decision-making processes and the ability to explore and analyze vast amounts of data efficiently.
“Finding a new ore deposit is like finding a needle in a haystack, every method could bring us closer to that goal. But we also need to be mindful that we can not just let something run loose without geologists on the ground. I do not think that AI will replace geologists but it is beneficial for the main experts in geology to partner with the main experts in other areas to advance our knowledge,” says Katharina Pfaff, Associate r esearch Professor, Colorado School of Mines.
ESG IS RESHAPING INVESTOR DECISION-MAKING PROCESSES
While mining has been key to Mexico’s growth, it has also been linked to irresponsible practices and negative impacts on the environment and communities. Thus, it is crucial for these companies to commit to society beyond profitability, and ESG reporting can make a significant difference in achieving this goal. Mining companies are seizing this opportunity to access financing while aligning their practices with environmental, social and governance standards.
“The ESG approach provides a global framework that gives us a baseline of where we currently stand and helps us envision where we want to go,” says Mariona Oliva, Vice President Earth and Environm ent, WSP.
The mining sector is often considered to be a conflict-ridden industry in Latin America. There are over 300 social conflicts related to mining, with Mexico being host to many of them, explains Alexandra Almenara, Vice President Sustainability Latam and US, Ausenco. This problem can hurt a company’s image and limit their access to financing.
“There is an important pending task for mining companies to become more attractive in accessing capital,” says Almenara.
In Mexico, ESG practices have sparked significant interest due to growing government concern and stricter regulations established for the industry. These regulations aim to promote greater responsibility and sustainability in business operations. Additionally, there has been a significant
increase in the participation and consultation of local communities.
Mining has been fundamental for the country’s sustainable development. The sector is present in more than 690 communities of 24 states in Mexico and contributes 4.3% of industrial GDP and 2.5% of the national GDP, making it a key industry in terms of employment generation and social development.
By actively engaging in ESG reporting, mining companies can demonstrate their dedication to sustainable development and responsible business practices. These reports showcase the company’s efforts in environmental conservation, social welfare and ethical governance, highlighting their commitment to the well-being of both stakeholders and the broader community.
“ESG is a matter of balancing the economic, social and environmental aspects. These elements must go hand in hand and be aligned,” says Alexander Braune, Partner, ErM.
Furthermore, ESG reporting enables mining companies to access financing options that prioritize sustainable and socially responsible investments. Investors and financial institutions increasingly consider ESG goals when making investment decisions. By disclosing their ESG performance, mining companies can attract capital from those seeking to support environmentally and socially responsible initiatives.
Through ESG reporting, mining companies can also enhance their reputation and
credibility. By transparently communicating their sustainability efforts, they can build trust with stakeholders, including investors, customers, employees and local communities. This trust not only strengthens relationships but also fosters a positive perception of companies’ commitments to environmental stewardship and social responsibility. “Transparency is not just about showcasing what has gone well but also addressing areas where performance has not been optimal and how issues have been resolved,” says Bernarda Elizalde-Andrews, Co-Founder, Centre for responsible Mineral Development.
Moreover, ESG reporting helps mining companies identify areas for improvement and develop strategies to address environmental and social challenges. By monitoring and measuring key performance indicators related to ESG factors, companies can set targets, track progress and continuously enhance their sustainability practices. This proactive approach allows them to stay ahead of evolving regulations, predict stakeholder expectations and mitigate potential risks effectively.
ESG reporting now places significant emphasis on key themes such as the socio-political context, social issues, human rights and climate change, topics that require thorough attention from companies. Moreover, responsible supply chain management is gaining importance, requiring companies to assess and address environmental and social impacts throughout their value chain. By addressing
these themes in a comprehensive and meaningful way, companies can demonstrate their commitment to sustainable and responsible business practices.
One of the significant challenges in the realm of ESG reporting is the lack of standardization across various frameworks and initiatives. The abundance of standards creates confusion for companies, as they struggle to determine which standards to adhere to and which initiatives to prioritize. Moreover, the lack of comparability between different standards further complicates the problem. While efforts are being made to harmonize these standards, each initiative operates with its own business model, focuses on different business aspects and caters to diverse stakeholde r groups.
Opinions vary regarding the most relevant metrics that participating companies
should address. This lack of harmonization adds complexity to the ESG landscape, making it challenging for companies to navigate and align their reporting practices effectively. “What truly matters is going beyond what regulations dictate and the one who manages to exceed the standards set by the country will become the leader in this field,” s ays Oliva.
Nevertheless, it is crucial to continue advancing and improving ESG practices regardless of the lack of harmonization. Despite the challenges posed by varying standards, companies should remain committed to their sustainability goals and focus on implementing meaningful initiatives. While harmonization efforts are essential, the pursuit of continuous improvement should not be hindered by the existing discrepancies. Ultimately, the overarching objective should be to foster sustainable development, regardless of the specific frameworks or standards in place.
MINING INDUSTRY ADOPTS RENEWABLE ENERGY, ELECTRIFICATION
Electrification and renewable energy are pivotal for the development of the mining industry, allowing it to minimize greenhouse gas emissions and improve its image among the general public. As the industry commits to implement ESG responsibility measures and decarbonize, it can find in technology a eat ally
Electrification also has certain limitations, explains Moreno. Globally, about 65% of low-density energy consumption can be electrified. The remaining 35% cannot be easily electrified, such as heavy transportation and industrial usage. Nevertheless, the mining industry still has significant opportunities to electrify many of its processes, and energy efficiency plays a crucial role.
There are significant opportunities in energy management systems, which can allow companies to advance toward decarbonization goals, says Manuel rubio, Energy Efficiency Manager, Grupo México Infrastructure Division. Mining companies are also embracing technology to remain competitive in the sector.
The pandemic was a turning point to advance decarbonization, digitize processes to increase efficiency and address the mounting pressure on the mining industry caused by cost increases, says Alfonso Caso, Managing Partner, AOSENUMA.
CAMIMEX’s 2022 Sustainability report points out that the total energy consumption of affiliated mining companies increased 15.6% from 2020 to 2021, from 10,804GWh to 12,487GWh. During that same period, the use of clean energy in the industry increased from
“The industry cannot afford to not decarbonize as its reputation and competitiveness are at stake”
Ramón Moreno CEO | Mitsui & Co. Infrastructure Solutions
34% to 50%, as clean generation became a priority in companies’ ESG agendas, reports the chamber. Due to the increase in energy use, mining companies have opted for electricity self-supply schemes from clean sources: wind, solar, hydroelectric and cogeneration. There are currently 36 mining units with self-supply schemes in Mexico, which are equivalent to 6,620GWh of the industry’s total consumption, which is almost two times more than in 2020
Another problem is the discrepancy between written regulations and the actions taken by the government. Moreno explains that this is due to the extreme changes that the energy industry went through, transitioning from a more open regulation to a stricter one under the current administration. For this reason, cooperation between the government and the private sector is essential for the orderly transition to renewable energy, says Moreno.
However, there are no federal incentives for the adoption of clean energies, says Valle. Therefore, the mining industry should take the lead and drive this transition. “The environmental issue carries significant weight in the mining industry. Investment in renewable energies has grown from US$36.5 million in 2021 to almost US$52 million in 2022, which speaks to the industry’s commitment,” says Caso.
The interruption of permits granted by the Energy r egulatory Commission (C r E) and the Ministry of the Environment and Natural r esources (SEMA r NAT) also affected the industry, reports CAMIMEX. Despite these challenges, the sector is expected to become more sustainable as it remains one of the most regulated economic activities in Mexico. To operate, mining companies must gain numerous environmental permits and conduct diverse studies to determine the ecological impact of a project.
Certainty is vital for investors as the country focuses on attracting nearshoring projects. However, every new project will need clean energy. “Everyone wants clean energy,” s ays Valle.
THE RACE FOR LITHIUM IN LATIN AMERICA
While demand for lithium is projected to skyrocket in the coming decades due to the
energy transition, concerns are mounting regarding the sustainability of water-
“The transition to renewable energies is similar to when the mining industry was beginning to adopt internal combustion mechanical equipment”
René Valle General Manager | MacLean Engineering
intensive lithium mining in Latin America and other regions. Through responsible mining practices, the region can become a sustainable and influential player in the evolving EV industry.
“Lithium will be the face of the decarbonization of the global economy,” says Pablo rutigliano, Founder and President, Latin American Chamber of Lithium (CALBAMErICA).
Latin America is home to the world’s largest known deposits of lithium, primarily located in Bolivia, Argentina and Chile — collectively known as the lithium triangle. These countries are poised to become important players in the global market.
According to the UN Development Program (UNDP), Latin America’s lithium reserves account for an estimated 60% of the global reserves. Of these, Bolivia boasts 21 million t, Argentina holds 19.3 million t and Chile possesses 9.6 million t. Chile, in particular, is among the leaders in commercial lithium production, as stated by the Center for Strategic & International Studies. Argentina and Bolivia still face challenges in terms of investment and geographical conditions, impeding their progress in harnessing the potential of their lithium reserves.
Governments across Latin America are seeking to directly benefit from their lithium resources, driven by concerns about the socio-environmental impacts of mining. Chile, for example, recently
introduced a national strategy that would require private companies to collaborate with the government on lithium extraction, while Chilean President Gabriel Boric aims to develop lithium products within the country.
Argentina, meanwhile, is constructing Latin America’s first lithium battery factory, moving beyond extraction and venturing into EV production. Meanwhile, Bolivian President Luis Arce has proposed the creation of a lithium ministry to enable greater involvement in extraction and profit-sharing. Similarly, Peru’s Congress is debating a bill to declare lithium a strategic public good and build a national lithium plant. Mexico, which possesses significant lithium reserves but has yet to commence mining, established a state-run lithium company in late 2022.
Demand for lithium is projected to skyrocket due to the transition toward renewable power and electric vehicles. However, many are concerned about the sustainability of water-intensive lithium mining in Latin America. The extraction process for lithium requires vast amounts of water, averaging 2.2 million L/t. This practice has triggered water stress issues in regions experiencing insufficient water availability to meet their needs.
CALBAME r ICA aims to unite lithiumproducing countries in Latin America to establish a regional reference price
for lithium carbonate. By joining forces, lithium producers can effectively optimize the exploitation of lithium throughout the entire supply chain, while supporting products related to electromobility. The chamber’s main objective is to promote the development of a comprehensive lithium-based economy in the region. “From CALBAME r ICA, we have been pushing for the creation of a standard for lithium carbonate and the creation of a regional reference price,” says rutiugliano.
As Latin America focuses on exploiting lithium, there is a pressing need for clarity regarding the distribution of the economic benefits generated by the mining industry, as many call for the preservation of social and environmental equilibrium. Balancing resource riches with sustainability concerns is crucial for Latin American countries to navigate the global EV boom successfully. By implementing responsible mining practices, fostering stakeholder
engagement and investing in green technologies, Latin America can seize the opportunity to become a sustainable and influential player in the evolving EV industry.
However, if the region does not establish reference prices, society will never get the real value of lithium or its benefits, warns r utigliano. “If we do not set reference prices, we cannot develop a sustainable business,” he adds.
The main associations regarding lithium are focusing on electromobility. Simultaneously, CALBAMEr ICA is working on the creation of a lithium index, aiming to formally establish a virtual regional projection for lithium’s price in the future. Chile, Peru Bolivia and Argentina are working closely with CALBAME r ICA and, according to r utigliano, the chamber has been in touch with Brazil and Mexico to strengthen their lithium industry.