A QUICK STUDY

Mexico 2019 | MINING | INTERVIEW

Before Mexico can unlock its untapped potential, it must first reform its tax code and invest in the right technology and systems.

Fernando Alanís
BIOGRAPHY
Fernando Alanís is the CEO of Industrias Peñoles, a 132-year-old Mexican mining company that specializes in base metals. He previously served as Executive Vice President of Metals and Mining Division of Industries Peñoles. He holds a degree in industrial chemical engineering from the Universidad Iberoamericana.

What are the biggest areas of opportunities for Mexico to strengthen its mining industry?

Mexico has huge potential to be a mining country; approximately 70% of its territory has not been explored for mining potential. The Frasier Institute in Canada ranked it 11th in the world in 2011 in terms of 15 different parameters for mining jurisdictions, but in the last four years we fell to 44th place. This was due to a variety of reasons, including additional taxes collected for local communities. However, only part of the money goes to mining communities; part of it is also kept by the state. Over the last four years, the mining industry paid close to MXN16 billion (USD837.384 million), a large amount of money that takes too much time to distribute and see an impact in these communities. This taxation made the industry lose a great deal of competitiveness against other mining jurisdictions. The new government in Argentina is also making major changes that are catching the attention of investors, while Peru has been declared a mining country and put in place favorable policies to attract investors. Mexico needs public policy to ensure greater certainty of investments similar to other countries, which is the government's responsibility. We, the industry, also need to invest in technology and systems. Another issue is that when one purchases land, they do not have any certainty it will be theirs, as the registration is not up to date.

What is your top priority as the new president of CAMIMEX?

There is a list of eight or nine things that the mining chamber has identified and that we are proposing to the new government. It has been extremely open and interested thus far. The new president has made a list of 25 priorities, of which one is mining. The government needs to recognize that mining can be a great way to develop isolated communities. Typically, mining goes where no one does, and we can bring in services, education, and infrastructure to isolated locales. We can also be an excellent arm for the government to look into the development of isolated regions in the country. One of the top priorities is to change the image of mining. Unfortunately, many do not know exactly what we do; many think it is a highly dangerous accident-prone industry, but that is not the case.

What is your strategy to break these paradigms?

We need to recognize our audience and speak the same language. Indeed, we need to let them know what our business is about, how we interact with communities, and how we care about our people. We are morally responsible for every one of our workers and committed to their safety, well-being, and health. We also need to learn how to transmit this, gauge how involved we are in different activities with the community, and show that we care about the environment. Mining is an activity closer to nature than any other. Since we depend on natural resources, we must also care greatly about them.

What are the advantages of expanding your focus from Mexico to Latin America?

It is always positive when a big company looks at different areas. There are mining deposits everywhere, and we need to go wherever makes sense for our culture and business philosophy to seek new businesses. Peru and Chile are extremely convenient for us in terms of culture, language, and ways of doing business. They also have a quick learning process. We have been there for many years now and have different projects in different stages of exploration. We have a project in Peru that is at the end of a successful exploration process. Our intention is to finish the exploration, acquire the land, develop the project, and operate it.