Mexico mining sector ripe for acquisitions
Mon Feb 21, 2011 9:28pm GMT Print | Single Page [-] Text [+]
MEXICO CITY Feb 21 (Reuters) – Mexico’s mining chamber said at least 50 silver, gold, copper and zinc projects are attractive targets for mergers or acquisitions and high metals prices will draw $4.4 billion in mining investment to the country this year.
Sergio Almazan, the head of the chamber, said investment will jump 7.3 percent in 2011 compared to last year, the boost driven in part by expansion plans at the giant Cananea copper mine, owned by Grupo Mexico (GMEXICOB.MX: Quote).
Cananea, Mexico’s largest copper mine near the border with Arizona, reopened last year after a three-year-long strike and is slowly ramping up production.
Mexico’s copper production is seen rising to 31 percent this year to 350,000 tonnes, Almazan said, slightly below forecasts made by the chamber made last September. [ID:nN29222549]
“In copper we hope to return to the levels (of production) we had in 2007,” before the strike began at the mine, Almazan said. Base metals miner Penoles (PENOLES.MX: Quote) also said on Monday it would invest $200 million in a new primary zinc mine in the state of Durango. [ID:nN21562647]
The ground is fertile for acquisitions, said Eduardo Luna, the director of precious metals miner Primero, with 738 exploration projects in Mexico.
“There are around 50 projects that are being studied by different companies that have the possibility to be developed beyond the capacity of their actual owners. Definitely there will be mergers and acquisitions,” Luna said at a chamber event in Mexico City, without naming specific companies.
The most advanced exploration projects in Mexico are already owned by the major mining companies, including Grupo Mexico, Goldcorp (G.TO: Quote) and Fresnillo (FRES.L: Quote), the precious metals arm of Penoles, Almazan said.
With new projects coming on stream like Fresnillo’s Saucito mine, Mexico’s silver production will jump to 138 million ounces in 2011, up from 128.6 million ounces in 2010.
Gold production is also expected to rise 12.5 percent this year to around 2.7 million ounces. (Reporting by Mica Rosenberg; Editing by Andrew Hay)
