The expectation of an imminent downward cycle in interest rates and geopolitical tensions have boosted the prices of metals such as gold, which values extraction projects.
Foreign Direct Investment (FDI) arrivals in the mining sector broke a record in the first quarter of 2024, reaching US$ 2,373 million, according to data from the Mexican Ministry of Economy.
The greatest productive capital is explained above all by metal mining, with an upward cycle.
Of the total FDI attracted from January to March of the current year, US$ 2,173.6 million corresponded to the mining of metallic and non-metallic minerals, US$ 131 million to services related to this sector and US$ 68.8 million to oil and gas extraction.
Over the course of 2024, gold has traded at an average price above the record 2023 annual average price of $1,941 per ounce, due in part to continued expectations of benchmark interest rate cuts in 2024.
Prices exceeded US$2,400 per ounce for the first time in mid-May.
According to Barrick Gold Corporation, the price of gold has remained strong as a result of geopolitical tensions, including Russia's invasion of Ukraine, the war between Israel and Hamas, global economic uncertainty and the expectation of interest rate cuts. as inflationary pressures and central bank purchases ease.
The impact of inflation concerns, tempered by a strengthening of the trade-weighted US dollar and a reduction in global holdings of gold ETFs, has also played a role.
The previous historical maximum in attracting FDI to Mexico was recorded in the fourth quarter of 2013, when it totaled US$2,218.9 million.
During 2023, the price of gold ranged between US$1,805 per ounce and an all-time high of US$2,135 per ounce. The average market price for the year of US$1,941 per ounce represented an all-time annual high and an increase of 8% compared to the 2022 annual average of US$1,800 per ounce.
Regarding the regulation of the sector, the Mining Law was reformed on April 20, 2022 to designate Mexico's lithium reserves as part of its national assets. Under the Mining Law, the executive branch is responsible for designating a decentralized public entity to carry out all exploration and use of lithium reserves.
On August 23, 2022, Lithium for Mexico was created for these purposes, which is supervised by the Ministry of Energy.
Finally, on January 24, 2023, the Ministry of Environment and Natural Resources, in collaboration with the Mexican Institute of Water Technology, launched the Geographic Information System (GIS), called “Water and Mining”, focused on determining the appropriate uses of Mexico's natural resources and strengthen preservation efforts through the implementation of policies that promote economic development.
