| VIEW FROM THE TOP
LEVELING THE FIELD FOR GENDER PARITY FERNANDO ALANÍS Director General of Industrias Peñoles
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Q: How would you assess the relationship between the new
of each company. Third, the market’s location. As for
administration and private industry?
the government, it must fulfill its responsibilities. For
A: In this new landscape, we have a great advantage
instance, in the previous years, Mexico was not very
given that Deputy Minister of Mines Francisco Quiroga is
competitive on electricity tariffs. To date, we still pay
knowledgeable about the sector and is committed to its
US$0.10 per kWh when in other countries like Canada
development. We speak the same language but at the same
this amount equals US$0.02 per kWh, in Peru US$0.04
time he can serve as a translator to communicate our main
kWh and in the US US$0.06 per kWh. In this industry,
interests and encourage understanding. I certainly believe
competitiveness takes place on a global scale. If Mexico
that much information that has been publicly expressed by
works with electricity prices that are two, three or even
the government is derived from the poor communication
five times higher, national competitiveness sees a relevant
between President López Obrador and public officials.
reduction. To face this challenge, we decided to generate
As soon as we approached the administration and our
our own electricity. In 2018, 92 percent of our consumed
ideas were heard, the tone radically changed. Given this
energy was acquired under a self-supply scheme and out
industry’s nature, we can reach locations where no one else
of this amount, 31 percent came from renewable sources.
is working. Our activities are backed up by infrastructure
By 2020, our goal is to increase this by 50 percent
and development opportunities for these communities and
toward our main objective to become 100 percent
mining is known for providing them. This is a long-term
renewable by 2027. This represents a double commitment
relationship and our participation must be well-received to
because we can become more efficient and increase our
achieve the social permit.
competitiveness and at the same time support the energy transition. Other basic infrastructure, such as ports, roads,
Q: What elements should be present to ensure the correct
railways, transmission lines and gas pipelines, are the
development of the industry in the coming years?
government’s responsibility. If the country does not have
A: The new policy approach must provide certainty.
an adequate vision, competitiveness will be threatened.
Investments in the mining industry are long-term and
Not only in the mining sector, but in every industrial
sponsors need to be sure that the rules of the game will
activity in Mexico.
not change. Latin America has some very good examples of these practices. For instance, Peru works under the tax
Q: What was the main motive behind the company’s
stability convention where taxes are established in periods
strategy to refinance its debt?
of 15 to 20 years. This provides certainty for economic
A: About US$800 million in Industrias Peñoles’ long-term
models of profitability projections. We executed a study
debt was going to expire in the next four years. We decided
together with CAMIMEX and an international adviser in
that the positive interest rate conditions in the market were
which we compared the tax payments and rights of the
favorable for a bond issuance under the 144A rule. This
mining industry in Mexico with other countries like Canada,
framework allows international investors to participate in
Peru, Chile, Australia and the US. The results demonstrated
the transaction. The issuance was a success as we were
that companies operating in Mexico pay up to 54 percent
able to raise US$1.1 billion in 3Q19. In these processes, you
more in taxes and rights compared to the US where the
can measure the level of appetite the company’s debt
payment is 22 percent.
attracts. In this specific case, it resulted in a 6:1 ratio, which showcases Peñoles’ positive market image and reputation.
Another indispensable topic is competitiveness,
This was a major achievement as the company had never
which depends on three main factors. First, the basic
raised a 10-year debt. Now, US$550 million is on a 10-year
infrastructure of each country, which is in the hands
a scheme and another US$550 million was raised over a
of the government. Second, the technology and staff
30-year period.
