Mexico Mining Forum 2020 Impact Report by Mexico Business Publishing

IMPACT REPORT

2020

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2020 The López Obrador administration has settled into office, and the mining industry remains key for achieving the government’s goal of sustainable and inclusive growth. Simultaneously, global mining is finally recovering from the last down cycle. Mexico’s task within this framework is to remain competitive against other attractive jurisdictions. Nurturing a positive image of mining among policymakers and the general public is key to this end. Miners must keep striving to operate in a manner that considers the natural environment. Moreover, as mining is an activity with localized costs whose benefits often are not fully experienced locally, companies must endeavor to bolster the development of the communities in their sphere of influence. Value-sharing mechanisms, such as the Mining Fund, are crucial, as is strengthening local supply chains. Miners are also presented with the challenge of regaining investors’ confidence and successfully navigating a dynamic financial environment. For this purpose, it is paramount to implement cutting-edge technology and proven operational strategies.

Against this backdrop, Mexico Mining Forum brings together the national and international leaders shaping Mexico’s mining sector, including the country’s top public industry officials. This high-profile congress is an invaluable opportunity for sector experts to discuss the industry’s hot topics and concerns in an effective and targeted networking platform.

In its fifth edition, Mexico Mining Forum 2020’s agenda has been carefully designed by knowledgeable analysts in consultation with business insiders to address the future of the mining industry amid the country’s current circumstances. Ranging from financing trends and the intricacies of accessing land, to strategies for procuring a solid value chain for a mining project, Mexico Mining Forum 2020 is set to provide eye-opening outlooks to all industry stakeholders.

2020

Quick Look:

"(The event) is a very important opportunity that lets many of the actors in the sector touch base and get feedback. ... We are very pleased with the number of attendees" Francisco Quiroga, Undersecretary of Mining at the Ministry of Economy

INCLUDING: ∙ Francisco Quiroga, Undersecretary of Mining at the Ministry of Economy ∙ Luiz Camargo, Country Head of Minera Cuzcatlán ∙ Alfredo Phillip, President of Guerrero Mining Cluster

29 TOP SPEAKERS

∙ Gerardo Durán, Director General of Chihuahua Mining Cluster ∙ David Vizcarrondo, Director of Strategic Accounts at Emerson ∙ Alberto Orozco, President of Sonora Mining Cluster ∙ Hilde Salgado, Deputy Minister of Economic Development in Sinaloa ∙ Miguel Ángel Lucero Olivas, Senator and President of Mexican Senate's Mining Commission ∙ Héctor Quezada, Country Manager of Victaulic Mexico ∙ Jody Kuzenko, COO of Torex Gold Resources

TICKET PRICES FOR 2021

Super Early Bird Rate MX$14,000 + IVA (until 18/12/2020) Early Bird Rate MX$16,000 + IVA (until 15/01/2021) Conference Rate MX$18,000 + IVA (until 10/02/2019)

Get your 2021 tickets now: www.mexicobusinessevents.com

142 COMPANIES REPRESENTED

“It’s an excellent scenario to come and get an update about the changes that are occurring in terms of normativity, innovation, management and best practices. There’s much to learn at this event

250

PARTICIPANTS

Alba Paz, Exploration at Grupo México

“It’s very well coordinated, very well organized with many spaces for networking. So, I would definitely recommend it” Adrian Blanco, General Manager Mexico of McEwen Mining

COMPA N Y AT T E N DA N C E AB Estudio de Comunicación

Delegacion General de Quebec en México

Accendo Banco

Deloitte

ACERALL

Delta Solutions

Advanced Metal Concepts

Desarrollos Rod

AIMMGM (Asociacion de Ingenieros de Minas, Metalurgistas

DMV - Mining Intelligence

y Geologos de Mexico)

Dumas Mining

Alamos Gold

Dynapro Pumps Mexico

Almaden Minerals

EC LEGAL RUBIO VILLEGAS

Altum Capital

ECODRILL

Amtex Corp

Electro Metalic

Anmark

Embajada de Canadá en México

AOSocial

Embassy of Canada

Arsenal Tire Solutions (Arsenal SAPI de CV)

Emerson

Asian Pacific Development Corp.

Energy to market

Austin Powder

Enestas

Belden - Hirschmann

Enuma

BERISTAIN ABOGADOS, S.C.

Equipos y Explosivos del Noreste

BRAY

ERM

Calderón, González & Asociados

Esseco

Carrizal Mining

Explosivos Oviedo

Cervecería Reforma

Export Development Canada

Chemours

FIFOMI

Chevez, Ruiz, Zamarripa

FIRST MAJESTIC SILVER CORP

Cisco

FLSMIDTH

Clúster Minero de Sonora

Foreign Trade, Health, Food& Beverages and Natural

Colegio de Ingenieros de Minas Metalurgistas y Geologos

Resources

de México

FullSpectrum Leadership

Comercio Global Consultores, SC

G4 Drilling

ComGlobal Consultores

GBQ

Compañia Minera Cuzcatlan (Fortuna Silver)

GENERAC

Consejo Zacatecano de Ciencia y Tecnología

Gonzalez Calvillo SC

Corpomin

Government of the State of Sinaloa

Cribas

Green Energy Development

CYANCO

Gruminex

Cyplus Idesa

GRUPO CALIDRA

Datamine

Grupo Mexico

DBR Abogados

6 MEMBERS OF THE PRESS

375 VIEWS ON LIVESTREAM

31,500 IMPRESSIONS

17,000 IMPRESSIONS

Grupo OHL

Oro Gold de Mexico

Grupo Peñoles

OutletMinero

Grupo PROSESA

Outotec

Grupo VISYSA

Pan American Silver Mexico

Gustavson Associates LLC, a member of WSP

Promo Imagen Corporativa

Hanwa American Corp.

PROSIC

Haynes and Boone, S.C.

PWC

Haynesboone

Rentar Environmental Solutions

HG Control

Sandvik

Hogan Lovells

Santamarina y Steta

HSBC

Schneider Electric

Iberdrola

Secretaría de Economía

Industrial Hanka

Secretaría de Economía de Zacatecas

Intercore

SEMARNAT

Intertractor America Corp.

SGS de Mexico

IPEC Ingeniería SA de CV

Siemens

John Crane

SKF de Mexico

Kepler

Smart Condition

KEY

Spencer Stuart

KPMG

SSAB

MACLEAN ENGINEERING

Subsecretaria de Mineria

MAG Silver

TAKRAF Mexico

McEwen Mining

TBM

Mergemarket

TDH

Metso

The Chemours

Minera Autlán

Timken

Minera Camino Rojo

Tinto Roca Exploración

Minera Cuzcatlán

TOP MANAGEMENT MÉXICO

Minerales Teran

TorexGold

MRI Andina Trade

Toronto Stock Exchange 1

Multisistemas

Veolia Mexico

Ocean Partners

Victaulic

Orbia

VMX

Organimax Nutrient Corp

Williams Scotsman

Orion Productos

WorldWise

Orla Mining

Worley

Neutral Satisfied

Profile of Attendees

56% High Level 37% C-level 7% Mid-level

Would you recommend us?

81% Highly recommended 16% Recommended 3% Not recommended

Most Valuable Element

Very Satisfied

41% Relevance of Topics 32% Networking Opportunities 27% Quality of Speakers

P R O GR A M

08:30

APPRAISAL OF THE ADMINISTRATION'S FIRST YEAR AND PRIORITIES FOR THE COMING YEARS

Presentation: Francisco Quiroga, Undersecretary of Mining at the Ministry of Economy 09:15

LICENSE TO OPERATE: SOCIAL RESPONSIBILITY AND ACCESS TO LAND

Moderator:

Gabino Fraga, Director General of Grupo GAP

Panelists:

Michael Harvey, Specialist in Government Relations, Sustainability and Communications

Luiz Camargo, Country Head of Minera Cuzcatlán

José Tovar, Community Relations Manager at Alamos Gold

Daniel Santamaría, Vice President of Minera Gorrión, Almaden Minerals

10:00

NETWORKING COFFEE BREAK

10:40

FINANCING TRENDS AND INVESTMENT DYNAMICS

Presentation: Javier Reyes de la Campa, Chairman of Accendo Banco 11:00

RISK MANAGEMENT: FINANCING BROWNFIELD PROJECTS IN MEXICO

Moderator:

Alfredo Phillips, President of Guerrero Mining Cluster

Panelists:

David Chelich, Head Business Development Mexico at TMX Group

Enrique Rodríguez del Bosque, Partner at RB Abogados

Alfredo Tijerina, Director General of FIFOMI

Javier Reyes de la Campa, Chairman of Accendo Banco

12:00

NETWORKING COFFEE BREAK

12:25

USING AUTOMATION AND DIGITALIZATION TO IMPROVE THE OPERATION OF MINING COMPANIES

Presentation: Jaime Gabarró, Senior Business Development Consultant at Datamine

Paulo Martins, Regional Director South America at Datamine

12:45

THE VALUE CHAIN BEHIND A SUCCESSFUL PROJECT DEVELOPMENT

Moderator:

Gerardo Durán, Director General of Chihuahua Mining Cluster

Panelists:

Alejandro Espejel, Country Manager of FLSmidth

David Vizcarrondo, Director of Strategic Accounts at Emerson

Agustín Enciso, Director General of Cozcyt

Enrique Espinosa, Deputy Director of Mineral Resources, Mexican Geological Survey

13:30

NETWORKING LUNCH

15:00

REDISTRIBUTING VALUE IN THE INDUSTRY: FONDO MINERO

Moderator:

Alberto Orozco, President of Sonora Mining Cluster

Panelists:

Hilde Salgado, Deputy Minister of Economic Development in Sinaloa

Miguel Ángel Lucero Olivas, Senator and President of Mexican Senate's Mining Commission

Bernardo Ramírez, Partner at Chevez Ruiz Zamarripa

Luis Javier Sánchez, Deputy Minister of Investment in Zacatecas

Carlos Silva, CEO of Santacruz Silver Mining

16:00

OPERATIONAL SUCCESS: CHALLENGES AND EXEMPLARY STRATEGIES

Moderator:

Héctor Quezada, Country Manager of Victaulic Mexico

Panelists:

Jody Kuzenko, COO of Torex Gold Resources

Adrian Blanco, General Manager Mexico of McEwen Mining

Salvador García, COO of Starcore

Ramón Mendoza, VP Operations at First Majestic

17:00

NETWORKING COCKTAIL

HIG HL I G HTS 20X X

KEY SPEAKER

MINING: MORE THAN A PRIMARY ACTIVITY A year into President Andrés Manuel López Obrador’s administration, Undersecretary of Mining at the Ministry of Economy Francisco Quiroga presented the Undersecretariat’s key lines of action to make mining activities a pillar of Mexico’s economy and a driver for other industrial activities. “Success of mining activities should not only be measured by the volume of minerals we produce but by what we can do with those resources,” Quiroga said during the opening presentation of Mexico Mining Forum held on Wednesday at the Sheraton Maria Isabel hotel in Mexico City. Mining can make a difference in society by focusing on the industry’s competitiveness

FRANCISCO QUIROGA

and the social challenges it faces, Quiroga said. “The goal is social and economic

Undersecretary of Mining at

viability in the long term.”

the Ministry of Economy Francisco Quiroga has more than

Social issues are at the center of the government’s agenda to make mining a more

18 years of experience in relation

sustainable industry. “Mining players have to become leading neighbors in their

to the mining industry. He has a

communities,” said Quiroga. “They should not replace the government but should

background in directorial positions at

comprehend the needs of their communities and establish a long-term vision that

several major mining-metallurgical

transcends the mine’s life cycle, considering their current and future environmental

companies, such as Villacero,

impact.” Beyond that, Quiroga specified that alliances that foster productivity and

ArcelorMittal and Metalcorp. His

operational continuity are a must for mining operations. “Activities should respect the

history with the Ministry of Economy

rights of workers and foster an environment that favors the participation of women

dates back to 1997 when he served as

in the mining workforce,” he said.

Trade Remedies Director in Safeguards and Antidumping until 2002. Quiroga

In terms of competitiveness, although there is confidence for investment in Mexico,

studied a BA in economics at UANL,

Quiroga says investors should look at the advantages that a community or region

has an MA in economics from Yale

offers, instead of focusing on the country as a whole. Otherwise, the perception of

University and an MS in operations

investment viability could be clouded, he said. Quiroga also highlighted regulatory

research from the University of

stability as a priority for the industry and the goal the government has to streamline

Auckland.

its processes at the General Mine Directorate (DGM) to handle everything through a single digital platform. “We want to simplify legal processes at the DGM and link this office with other government regulators,” said Quiroga. Financing and security are also key issues that the government is tackling. With the former, Quiroga said the goal is to market Mexico as a low-risk investment destination, looking to communicate the country’s compliance with global standards. FIFOMI’s involvement is also crucial in guaranteeing project viability and competitive financing

with more flexibility. “Clear communication is also a must with key decision-makers and authorities to open Mexico’s projects to global markets,” explained Quiroga. Regarding security, the government has a clear mandate: “Blackmailing or stealing from the mining sector will not be a profitable business,” he said. “We will establish a quick and effective response to any robbery attempt to make it harder to transport and commercialize stolen goods.” Lastly, Quiroga turned his attention to the importance of mining activities, not only as a productive industry but as the source of raw materials for other industrial activities. While the Undersecretariat looks to increase production and ensure reliable, sustainable and inclusive production, it is also analyzing the role that this industry plays in sectors like electronics, energy and automotive

“Success of mining activities should not only be measured by the volume of minerals we produce but by what we can do with those resources” Francisco Quiroga, Undersecretary of Mining at the Ministry of Economy

to introduce best practices and certifications so that competition is not in terms of costs but in terms of added value. “The goal should be to make mining a competitive leverage for other manufacturing industries and for Mexico’s position as a manufacturing powerhouse,” said Quiroga.

COMMUNITY ENGAGEMENT CRUCIAL TO MEXICAN MINING INDUSTRY

KEY SPEAKER

As mining has modernized, the understanding of the need to deliver benefits to local communities impacted by mining activities has grown. Engagement of local communities and the respect of land rights have now become an integral part of a mining company’s operations, said the panelists at the Mexico Mining Forum 2020. The second panel of the forum was moderated by Gabino Fraga, Director General of Grupo GAP. Fraga led the highly-experienced panel in discussing how Mexico’s mining industry is bridging the gap between companies and communities, and how mining players are adapting their community outreach as they learn from the past.

MICHAEL HARVEY Specialist in Government Relations,

Michael Harvey, the former Director of External Relations at Newmont Goldcorp

Sustainability and Communications

and speaking in his capacity as a specialist in government relations, sustainability

Michael Harvey has 20 years of

and communications, explained the positives and negatives of the country’s mining

experience in government relations

industry. “After working in Brazil and Venezuela, it is clear that in Mexico there

and strategic communication. As a

is far more access to government officials. It is easier to arrange meetings with

diplomat, he was Head of the Political

high-level officials here,” said Harvey. However, the rule of law is not always taken

Section of the Embassy of Canada in

seriously as a central point of focus within a successful mining project by government

Brasilia, Bogota and Caracas. Harvey

officials, he added.

is a lawyer with the Quebec Bar Association, holds degrees in law and

José Tovar, Community Relations Manager at Alamos Gold, outlined the increasingly

political science and is studying for a

problematic cleaving in understanding between communities and mining

Master’s in international commercial

companies. “We cannot deny that the main risk with mining work has been the

law and practice at the University of

social operating license and there is a growing trend of social conflicts around

Edinburgh. He was Director of External

mining projects,” he said.

Relations at Newmont Goldcorp from 2013 to 2020.

A strong community relations program, which values the considerations of the local community and brings benefits directly to the people, is essential to solving this issue, Tovar said. Rather than considering community outreach a secondary concern, it must be incorporated into the business’ core strategy and be given the same consideration as factors including security and finances are. In this way, community trust can be won and growth can be generated for the local economy

HIG HL I G HTS 202 0 and the company. “The mining industry has all the potential to be an ally for sustainable growth in the territories where we operate,” he said. Daniel Santamaría, Vice President of Minera Gorrión, Almaden Minerals, echoed the need to incorporate the local communities into the strategy of any modern mining operation. At his company’s operation in Puebla state, there is constant communication with the local community, he stated. The community’s insights are given a special status as an important reference point for the project’s development: “As companies, we have a fundamental corporate responsibility to respect human rights, in the participation, communication and confidence of local communities,” he said. However, Mexico’s vast diversity also plays into the way that companies must interact with nearby residents. Luiz Camargo, Country Head of Minera Cuzcatlán, explained that his company’s assets in Oaxaca demonstrate that a one-size-fits-all approach to community engagement is naïve. Camargo pointed out that Oaxaca does not have as extensive a history of mining operations as other northern states like Sonora. Modern mining practices are therefore less understood in the state. It is the company’s responsibility to explain how mining has advanced, he said. At the heart of this is open communication: “We must explain the benefits that modern mining can bring to the area,” said Camargo. “We offer tours of the mine and have an open-door policy as a company, so that the community can get to know us.” Gabino Fraga noted that Oaxaca’s migratory history, in which a high-percentage of people leave the state for work, also made the role of women within the local community more important than in other regions. Camargo agreed and explained that through community engagement, which supported education and the acquirement of skills, the company had helped local women increase their wages. “Local production is something that we try to incorporate to encourage the growth of the societies that surround us. Within these actions, we try to incorporate women to reduce the patriarchy that generally surrounds the sector,” he explained. Santamaría also focused on the need to be proactive in seeking the opinion of the community, and how daily consideration to the views of local people was an

important way to develop strong relations and avoid conflicts: “We are a company that approaches the communities directly, we have a team focused on that part specifically. It is essential to complement all our technical work,” he said. Santamaría added that it is crucial that mining companies go beyond the simple delivery of economic improvements to the local region. Strengthening of human rights, the alleviation of poverty and enhancing the access of local people to health and education services is vital, he said.

FINANCING TRENDS AND INVESTMENT DYNAMICS

KEY SPEAKER

Javier Reyes de la Campa, Chairman of Accendo Banco (AB), highlighted Mexico’s enormous potential in the mining sector during his presentation at the Mexico Mining Forum 2020 at the Sheraton Maria Isabel hotel in Mexico City on Wednesday, saying the industry is crucial to achieve greater economic growth. “The vision of the Ministry of Economy is very assertive in its approach to strengthen and grow our capacities in the sector,” he said. Mexico is among the leaders in the production of silver, gold and copper but what makes the country especially strong on the operational side is how it takes advantage of the productive chain, Reyes said. He mentioned that countries like Ecuador, which

JAVIER REYES DE LA CAMPA

has just opened up its mining industry, are enjoying rapid growth. “That should make

Chairman of Accendo Banco

our country prioritize the strengthen of the sector.”

In addition to his role at Accendo Banco, Javier Reyes is Founding

AB has a great deal of experience in financing mining projects, which is why Reyes

Partner and President of Private

believes that “right now is the perfect moment to invest in the mining sector. This is

Equity CP. With more than 20 years

the right moment in the economic cycle to do so.” He added that after the 2008-09

of experience in the natural resources

global economic crisis, the world’s monetary policy stopped working. The proof of

sector, he began his career in the

that is inflation and the growth of national debt across the world. Right now, the US

financial sector in 1996 at Casa de

national debt is over US$22 trillion.

Bolsa Estrategia Bursátil in Mexico City. In 2001, he founded Mex E Trade

Reyes also said pointed to risks that could hamper the global economy, pointing

Asesores, a firm that specialized in

to China and the coronavirus as an example. “Coronavirus has affected supply and

consulting related to mining and

demand of products and services and life in China is basically on hold,” Reyes says.

energy. He actively participates in

Using graphics, he demonstrated how China’s growth was at 6 percent and after 30

the decision-making process of three

days it had slowed down to 4 percent. Stocks in China fared even worse, dropping

funds: Antares Oil & Gas, Accendo

dramatically in five minutes. “After 11 years of up and downs, China’s market might

Natural Resources and Cygnus Real

not recover from this as quickly as we think.”

Estate Opportunity Fund.

The safe bet right now would be to avoid risk, Reyes said. He added that the mining sector represented a good opportunity. “I encourage investors to look at the mining sector, which has been quite ignored for the past decade.”

HIG HL I G HTS 202 0 KEY SPEAKER

FUNDING BASED ON CLEAR ASSET MANAGEMENT In an environment with no new mining concessions, brownfield projects become crucial for stakeholders. “However, lacking and expensive funding force companies to find ways to mitigate risks and appease investors,” said Alfredo Phillips, President of the Guerrero Mining Cluster and moderator of the Risk Management: Financing Brownfield Projects in Mexico panel, at Mexico Mining Forum held on Wednesday at the Sheraton Maria Isabel hotel in Mexico City. David Chelich, Head of Business Development Mexico at TMX Group, highlighted that regardless of its nature – green or brownfield – equity is the prime source of funding

ALFREDO TIJERINA

for any mining project. “Projects are never fully financed with debt,” he said. The

Director General of FIFOMI

problem, however, is that the needed resources are nonexistent in Mexico, according

Alfredo Tijerina is Director General

to Javier Reyes de la Campa, Chairman of Accendo Banco. “Capital does not exist in

of Mexico’s Mining Development

Mexico in the way we need it. Our stock market is not specialized enough and there

Bank (FIFOMI) at the Ministry of

is much asymmetry in information,” he said.

Economy. Previously, he worked at the Tax Administration Service

Although there are development banks and trust funds like FIFOMI available, these

and participated with the IMF on

players require warranties to their invested capital and do not get involved in risk

the preparation of diagnoses of

operations. “Neither FIFOMI nor banks will grant risk capital, which means the country

tax administration issues. Tijerina

must improve the conditions to access such resources,” said Reyes. “The risk in mining

is also a professor and researcher

operations is extremely high, even more so probably than hydrocarbons,” said Alfredo

and has published several articles

Tijerina, Director General of FIFOMI. “Furthermore, bank do not have a specialized

in prestigious journals. He holds a

area in mining, which means they do not understand this risk.”

BA in economics from the National Autonomous University of Nuevo Leon

Another problem for companies, especially younger ones, is that before needing

and an MSc and Ph.D. in economics

capital to ramp up operations, players require capital to deliver all necessary studies

from the University of Cincinnati.

to get the licenses and permits needed to operate. “You first need a group of private investors to fund your studies in order to access larger financing,” said Enrique Rodríguez del Bosque, Partner at RB Abogados.

Mexican companies have the advantage, however, of being in a good place in terms of investment attractiveness, according to Chelich. “Mexico as a mining jurisdiction ranks fourth globally in terms of investment and 126 companies listed on the TSX and TSXV have operations in Mexico with 366 mining properties,” he said. Companies eligible for investment, according to Chelich, are those with diverse portfolios

“Extraction industries are among the most criticized and investors are always reviewing ESG performance” David Chelich, Undersecretary of Mining at the Ministry of Economy

and management teams experienced in taking projects from discovery to production, while increasing shareholder returns in every phase. Rodríguez highlighted that unlike greenfields, brownfield projects have the advantage of deriving from a project that was already successful. “There are already assets and production flows that give certainty to investors,” he said. However, for companies to approach possible stakeholders, due diligence is key. “Companies have to do an exhaustive analysis of what they have, not only in terms of assets but also in terms of relationships with the community, with the government and even with the union,” said Rodríguez. Chelich agreed with this statement, explaining that ESG is extremely important for the Toronto Stock Exchange and for retail investors. “Extraction industries are among the most criticized and investors are always reviewing ESG performance,” he said. ESG, however, is not just about being a good corporate citizen. “Companies that focus on ESG achieve better cost savings and profitability in the long term, which enhances the company’s capability to access capital,” said Chelich. According to Tijerina, FIFOMI’s funding is always linked to permits and clear financial statements. “However, even though we can reduce the requisites for small miners finance-wise, we always maintain our standard requisites in terms of social and environmental permits,” he said.

HIG HL I G HTS 202 0 DIGITALIZATION SET TO SHAKE UP MINING INDUSTRY: DATAMINE Mining has long been at the back of the line when it comes to industries welcoming new technologies. This is set to change, Jaime Gabarró and Paolo Martins, Senior Business Development Consultant and Regional Director South America at the world’s leading mining software provider, Datamine, told the Mexico Mining Forum 2020 audience at the Sheraton Maria Isabel hotel in Mexico City on Wednesday.

“The new technological platforms allow us to optimize and achieve greater control, stabilizing the operation that through the systems we can use and generate greater added value” Jaime Gabarró, Senior Business Development Consultant at Datamine

Jaime Gabarró opened his presentation by explaining that how most mining companies perceive technology and digitalization in business is not how it plays out in practice. While the idea of technology commonly conjures up ideas of applications like Waze and Uber, there is little understanding of the process behind building such insightful platforms. “These are technologies that we can interact immediately with, and which display data in real time,” explained Gabarró. “But to achieve this, a base of data needs to be built.” Companies in Latin America have traditionally built databases and solutions for their use in-house. But this solution is unsustainable as only few people have the specialist knowledge required and employees come and go. Additionally, this route poses a problem of simple exchange of data throughout the company to deliver

integrated, wide-view data insights, Gaborró explained. The problems that mining’s existing digital landscape poses are the laboriousness

KEY SPEAKER

of data collection, the disjointed connection of information across multiple systems – sometimes within one company – and the reduced value that extracting that data therefore offers. Digitalization, and the use of digital twins, can help resolve this issue. Digitalization integrates separate data strands to help identify themes from historical trends, to offer real-time sensor data to drive short interval control in execution of plans, and to derive future insights with AI tools to predict outcomes across a mine’s supply chain, among other benefits.

JAIME GABARRÓ

But data must be converted into information before it can result in added value, said

Senior Business Development

Gabarró. Digital twins, which can map the real landscape of a mining company’s

Consultant at Datamine

inventory and tracking processes, provide this conversion. Financial and accounting

Jaime Gabarró was co-founder

processes, among many others, can be automated with clarity, and are fully auditable.

of Exedra, a software company specializing in logistics and

Digital twins can also be put to use in the mine itself, especially in the exploration

commercial process solutions for

stage. Datamine’s DataBlast software offers informational insights on the blast layout,

the mining industry in 1999. The

charging and initiation design of a mine, can be integrated with Drill Navigational

software became part of what

Systems and offers real-time field measurement, among other features. The

is now Datamine’s MineMarket

company’s WipFrag software package, meanwhile, processes fragmentation analysis,

solution. Gabarró has held different

can capture information from drones and offers on-stream analysis of truck tips and

roles globally, from research

conveyors.

and development and product management to implementation

“The new technological platforms allow us to optimize and achieve greater control,

and technical solution design. His

stabilizing the operation that through the systems we can use and generate greater

experience includes projects for

added value,” he said.

local and global mining companies in a variety of regions (Africa, Asia,

Datamine’s world-leading ability was outlined by Paolo Martins who explained that

Australia and the Americas).

the company is part of the Canadian Constellation Group that includes 450 software

companies among its members. “We are the only supplier that covers the entire mining chain. We are part of a group interested in investing in acquisitions of new products and solutions for the entire mining process in Mexico,” he said.

THE VALUE CHAIN BEHIND SUCCESSFUL PROJECT DEVELOPMENT

KEY SPEAKER

Although the mining sector plays a pertinent role in Mexico’s economy, the industry needs to continue to demonstrate its relevance, Enrique Espinosa, Subdirector of Mineral Resources at the Mexican Geological Survey, said during a panel discussion at Mexico Mining Forum 2020, held at the Sheraton Maria Isabel hotel in Mexico City on Wednesday. “Mexico is behind several powers such as Canada and the US but it is our responsibility to provide exploration and new deposits, to be committed to generating new processes and to strengthen the supply chain to demonstrate how the mining sector contributes to the country.”

DAVID VIZCARRONDO The panel, titled “The Value Chain Behind Successful Project Development” and

Director of Strategic

moderated by Gerardo Duràn, Director General of the Chihuahua Mining Cluster,

Accounts at Emerson

broached subjects such as sustainable actions in mining, the impact of technology

David Vizcarrondo is Director of

and innovation on processes and the overall responsibility of the mining sector

Strategic Accounts at Emerson

in Mexico. “In addition to mineral demand, the drivers behind mining are the

Latin America. Previously, he was

environment and climate change, the digital transformation and automation,” said

responsible for the commercial

Agustin Enciso, Director General of Cozcyt. He also pointed out that the focus

strategy of Emerson in Mexico. From

for the industry needs to be on the future as well as the present. “Mining will not

2014 to 2015, he was Country General

attract more investment nor will it develop high-quality talent if it only focuses on

Manager in Peru, where he was

communicating its present benefits. Companies need vision toward the future.”

responsible for the management and oversight of Emerson’s operations.

The panel also spoke of the need to break stereotypes and educate the public on

Vizcarrondo holds a BA in civil

the good that the industry does for communities. “Mining is not a highly invasive

engineering and an MA in finance

practice, it has evolved to be a synonym for social responsibility, sustainability

from Universidad Católica Andrés

and most importantly, technology and innovation,” said Duràn. On the technology

Bello, as well as an MBA in logistics

front, David Vizcarrondo, Director of Strategic Accounts at Emerson, discussed the

from Penn State University.

HIG HL I G HTS 202 0 evolution of technological trends in the sector. “Automation and technology have been spearheading innovation, a development focused on mining specialization, production costs, efficiency and safety,” he said. Expanding on the technology question, Enciso spoke about an industrial park in Zacatecas that “encourages and educates in the use of technology to ensure that the mining industry develops research centers, talent, technology and suppliers to continue promoting development for other sectors.” Espinoza shared this point of view and added that, “The future of mining must be with mining alliances and social development. This alliance begins with exploration and the geologist who opens the project and is the first ally of the community.”

KEY SPEAKER

Turning to the future of the sector, Alejandro Espejel, Country Manager of FLSmidth, described the long-term nature of every mining project and the resulting accomplishments that come from that. “Each mining project is long term, where the investor seeks to satisfy a challenge related to volumes and extraction efficiency. Robust suppliers are needed along with up-to-date knowledge. We develop projects, do tests locally, have equipment to analyze the products that are going to be used and develop systems that optimize the process.” To this, Enciso added that, “Automation will eliminate many jobs at mines. The challenge now is to ally with academic institutions to develop the talent that companies will need in the future.”

MIGUEL ÁNGEL LUCERO OLIVAS

The challenges that Mexico faces are not restricted to the local industry, and the

Senator and President of Mexican

priorities for the industry are globally understood. “The global challenges of

Senate's Mining Commission

mining have concrete priorities that go hand in hand with sustainable development

Miguel Ángel Lucero Olivas is

and security. Also preparing mining for the next generation is important, making

renowned as an educator in his

it attractive to the new generation. Digitalization does that,” said Vizcarrondo.

native state of Durango, where he has been headmaster and developed youths. He has collaborated with

MINING FUND: STILL LOOKING OUT FOR MINING COMMUNITIES?

the Red Cross and crafted an early-

Six years after its creation, the Mining Fund was canceled in favor of a new right

study plans for underprivileged

education neuro-pedagogical model

companies have to pay that will be used for education infrastructure. Although

that is widely used in Latin America.

companies agree that the resources stemming from the fund should be better

Sen. Lucero Olivas is committed to

and more transparently used, they also agree that the beneficiaries should be

furthering and protecting children’s

mining communities, said Alberto Orozco, President of the Sonora Mining Cluster.

educational rights, and to galvanizing

As moderator of the Redistributing Value in the Industry: the Mining Fund panel

Mexico’s mining, agro and tourism

during Mexico Mining Forum, Orozco led a discussion between the public and

sectors.

private sector on Wednesday at the Sheraton Maria Isabel hotel in Mexico City.

In 2014, the Mining Fund was created as a right that companies had to pay, so the resources could be invested in the development of communities where extraction activities took place. According to Bernardo Ramírez, Partner at Chevez Ruiz Zamarripa, unlike a tax that is discretional in terms of resource allocation, rights are paid based on a service. “In mining, the goal is to redistribute value where cash flow was generated,” said Ramírez. However, in 2020, the government approved a reform that

“Considering that by 2019, MX$18 billion (US$970 million) had been collected through the Mining Fund, this is not a minor issue” Bernardo Ramírez, Partner at Chevez Ruiz Zamarripa

completely overhauled the Mining Fund in favor of a new right. Resources will now be destined to education and will be redistributed as follows: 85 percent to the Ministry of Education, 5 percent to the Ministry of the Economy and 10 percent to infrastructure programs, according to Ramírez. “Considering that by 2019, MX$18 billion (US$970 million) had been collected through the Mining Fund, this is not a minor issue,” he said. “Everyone asked us to keep the Mining Fund intact,” said Miguel Ángel Lucero, Senator and President of the Senate’s Mining Commission. According to Lucero, the commission fought against the Morena party majority in the Senate but eventually lost against 70 percent of the chamber who voted in favor of the creation of a new fund to redistribute resources among 200,000 elementary schools. The Senator highlighted that inconsistencies and lack of transparency in the use of resources were the main reasons behind President López Obrador’s decision to terminate the Mining Fund. “Resources were not used for infrastructure projects but for electoral campaigns. We should be happy that the MX$4 billion (US$214.8 million) we are expecting to collect in 2020 will be used on something useful for the country,” he said. These views, however, were ill received by most industry stakeholders and decisionmakers, including the state administrations of the major mining hubs in the country. “We seek to come up with a scheme to reinstate the Mining Fund according to the mechanics of the new administration,” said Luis Javier Sánchez, Deputy Minister of Investment of Zacatecas, calling for collaboration with the federal government to not terminate the Mining Fund. Sánchez highlights the role that mining plays in the Mexican economy, especially in Zacatecas that is the leading global producer of silver and the biggest national provider of lead and zinc. “We need to be allies to this sector,” he said. Hilde Salgado, Deputy Minister of Economic Development of Sinaloa, however, chose to make the benefits of the Mining Fund more evident. “Sinaloa has 112 mining projects and 1,470 concessions managed by 58 companies from Canada, China and the US. Between 2014 and 2017, resources stemming from the Mining Fund resulted in MX$194 million (US$10.4 million) invested in infrastructure, education, highways, services and many other projects that can all be verified, with MX$62 million (US$3.3 million) left over that is already allocated to several projects. Approximately 98 percent of the economy of communities in the mountain range depend on mining operations, which are now left in uncertainty,” she said. According to Salgado, companies will now have to give back to communities twice. Once with this new tax and then with projects directly with communities, since these will not see a return from the government due to the lack of proper direction of this new right. Carlos Silva, CEO of Santa Cruz Silver Mining, disagreed. “Actually, we will have to give back thrice. Companies have always been responsible for the infrastructure development of our communities. We have always had our communities as a priority because that is the only way we can be productive. This means that beyond the Mining Fund, we have always developed projects in favor of communities,” he said.

HIG HL I G HTS 202 0 Although Ramírez acknowledged that the Mining Fund has some deficiencies in the way the right was calculated and how it relates to the income tax, its impact on communities and social development was visible. “If there is clarity in what kinds of projects are considered beneficial for communities, then there is no room for corruption,” he said. “The impact the Fund had was good. We previously fought against it but now we are fighting for the resources to be used where they should be,” said Silva. Considering the negative response from the overall industry, Lucero recognized the difficult position of the Senate and the Chamber of Deputies. “It is hard to defend what some consider undefendable. However, difficult situations require hard solutions,” he said. When asked how the government would make sure there was no corruption in the way resources would be managed now, Lucero referred to the new way the government works in terms of social programs. “Resources are given directly to those who need them. Lack of bureaucracy means fewer chances of corruption. Schools will now receive resources directly, which they had never received before,” he said. Salgado, however,

KEY SPEAKER

saw this as a political, rather than a social action. “Everyone wants what is best for the country but these measures seem like a populist strategy to secure votes for the next election,” she said.

PEOPLE, SAFETY THE KEY TO OPERATIONAL SUCCESS, SAY MINING LEADERS Though technology will undoubtedly play a major role in the mining industry’s development over its short and long-term future, the message from the panelists during the final discussion of the Mexico Mining Forum 2020 was that people and safety are

JODY KUZENKO

the pillars of success.

COO of Torex Gold Resources Jody Kuzenko is a senior mining

Moderating the panel on “Operational Success: Challenges and Exemplary Strategies,”

executive with over 20 years of

Country Manager of Victualic Mexico Héctor Quezada invited the four-strong group

operational and business experience,

of industry leaders to share the critical changes that their companies made to their

mainly at Inco/Vale. After the first four

operations during the last year, and which delivered success.

years at Inco as Chief Legal Officer, she moved to the operational side of

Jody Kuzenko, COO of Torex Gold Resources, remarked on the dramatic change that

the business where she held roles of

her company’s operating mine in Guerrero state saw last year. Explaining that in 2019

increasing responsibility in operations

the company produced 450,000oz of gold, Kuzenko said that this success was based

management. She has a proven record

on simple measures. “As an operator, I judge myself on two key metrics: production

of execution and leadership in the

and safety. In 2019, we had a 28% improvement in gold production on 2018 and a 32%

areas of sustainability, energy, safety,

reduction in lost time injuries over 2018. We are closing in on 5 million person hours

health and environmental protection,

worked free of lost time hours.”

transport functions, oxygen and acid plants, refineries, and community,

She explained that, contrary to expectation, which assumes technology will provide the

labor and government relations.

basis for any major increase in operational success, it was improvements in personnel

and safety standards that her company successfully leveraged. “If you get people and safety right, in my operational experience, everything will be right. Get them wrong and nothing is possible – it doesn’t matter what technology you have in place.” The centrality of an experienced and knowledgeable workforce was a theme repeated by other panelists. Adrian Blanco, General Manager Mexico of McEwen Mining, noted that his company’s operations have drastically improved since recruiting the most experienced workers possible. Experienced heads make a huge difference to operations in a short time period, he said. For Salvador García, COO at Starcore, mining’s traditionalist character posed a unique obstacle in the industry’s chase to improve standards, now at the core of what makes a mine successful and worthy of investment. Pointing out that poor safety standards put lives in danger and are also an indicator of poor long-term sustainability, he said that: “When I started working at the mines, I was shocked to see the safety indexes as they were incredibly high. They are also one of the most important indictors for a project’s baseline.” The panelists also agreed that technology will make a huge impact on a mine’s success, though the industry and Mexico must do more to integrate the benefits modern tools bring. Blanco said that the lack of technology has led to a gulf of innovation within mining that must be overcome if environmental and social concerns are to be better fulfilled. “There is a deficit of transformation in the sector, mainly on sustainable measures. Every operation can use technology to support their processes,” he said. Environmental security is becoming a greater concern to the industry. When asked by Quezada how a company can best measure its performance in strengthening its safety processes to protect against unintended damage, Ramón Mendoza, Vice President Operations at First Majestic, pointed toward international players. “Benchmarking against the most prominent players in the most advanced markets, like Australia and Canada, is crucial,” explained Mendoza. “We must look toward industry leaders and try to achieve those levels.” The focus by industry players on environmental safety is representative of the world’s changing considerations, Kuzenko remarked. It is important that rather than profit alone, companies understand that poor safety and security standards are beginning to color the view of a company. “The only measurement for investors is whether they are willing to invest in you. But I would say that the investment community, and the world as a whole, is changing. While investment metrics used to be only cash and margin-related, the world is waking up to the need for ESG-type investment: environmental, social and governance,” she said.

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