WHERE THE WIND BLOWS

Mexico 2016 | ENERGY & MINING | INTERVIEW

TBY talks to Jesús Herrera Ortega, Director General of Geo Procesos, on the development of the mining industry, the challenges of the mining tax, and future plans for the company.

 Jesús Herrera Ortega
BIOGRAPHY
Jesús Herrera Ortega has worked for mining companies since he was 14. He obtained his degree as a technician and began working at a mine in the state of Hidalgo. He was with Minera Autlán for 13 years. Ortega later purchased part of the company’s machinery and tools to establish his own company.

How was Geo Procesos founded?

Geo Procesos officially started doing cartography for the federal government in 1997. In 2013, the company moved from exploration services to extraction services, as the government started to carry out its own exploration, and the number of contracts given to private companies was substantially reduced.

How would you characterize the extent to which Mexico has developed its mining resources?

Mexico has an enormous amount of resources, yet only about 30% of them have been explored and exploited up until now. Many factors have contributed to this shortage in the resources taken, such as the increase in environmental friendly policies, stricter laws in the exploration of mines, and so on. Mining is still significant in the Mexican economy, but it lags behind other local sectors as well as its role compared to what it represents in other Latin American countries.

How have the recent amendments to the mining tax regime affected the sector?

It has profoundly impacted us due to the tax applied to mining companies, which is comparatively higher than taxes applied to our peers in other emerging countries. This tax is necessary, but setting it up at 4% rather than 7.5% would be beneficial for both parties, mainly because it reduces employment and it has been applied during a time when the prices of commodities are low, affecting the market even more. Being a large multinational with high-tech devices pushes us to compete at a disadvantage compared to other mining companies, and this tax only widens that gap.

Would you say this tax is the biggest challenge that you currently face?

The 7.5% tax is the biggest challenge, and I would reduce that to 4%. The other challenge is security; we need to improve the rule of law in many parts of Mexico to propel economic benefits. A third obstacle is the mismatch between the mining and ecological laws; they need to be harmonized without one negatively affecting the other.

What distinguishes Geo Procesos from its competition?

We have a deep knowledge of the sector; we comply with the regulations in terms of both legislation and social responsibility and we also know the country extensively. When someone wants to invest here, we know how to provide them with what they need. We are a safe bet in terms of mining investments and services.

In what direction do you see the growth of Geo Procesos in the upcoming years?

We are exploring the field of clean energies in deserted regions in Mexico and we plan to stick to those projects and follow the resulting developments. The current situation for mining services is not especially positive, as growth is not coming in big numbers, but at least it has been stable and will remain so in the following years. There are also great investments in wind power fields going on at the moment and we are going to keep an eye on those projects.