As a dire response to restore itself, Anglo American, one of the biggest mining companies in the world, has announced it would be cutting more than 85,000 jobs within the next couple of years. The mining giant has set in motion a reconstruction plan in which it plans on selling assets, reducing jobs, and suspending dividend payments. Anglo American is not the only mining company in woe, the entire mining industry has had a strenuous year due to the plummeting prices of metals, and decreasing mineral demands from countries like China. Companies like Glencore, Rio Tinto and BHP Billiton have seen drastic falls in their stocks in December, and are beginning to formulate their new plans to overcome future obstacles.
The Mexican mining industry has been struggling to stay afloat. Several factors have affected the industry, such as the over saturation of metals, price dumping, and tax royalties. These factors have reduced production, and discouraged investment. The mining industry is extremely risky, and in order to attract investment, companies must be able to ensure the stability of the projects. According to the Ministry of Economy, out of the 803 mining projects, 129 of them were postponed, and investment for new exploration projects totaled in US$ 856.4 million. Yet, with such grievous elements surrounding the industry, Mexican mining companies, Peñoles, Grupo Mexico, and Mineria Frisco have made a number of investments in 2015, are continuing to expand operations, and are searching for new strategies to reduce operational costs.
Grupo Mexico invested a staggering US$350 million dollars in the third trimester alone, adding up to US$905 million dollars in 2015. It has invested more than half of this amount in the development of new projects in Mexico, and in the acquisition of new mines, such as El Pilar. Its investment strategy has optimized processes, the usage of resources and has reduced its costs by US$213 million. Analysts forecast a much brighter future for the company, such as an increase in profits by 7%, which will total up to MX$23.1 billion. Grupo Mexico holds the leading position within the Mexican railroad transportation sector, with 55% of the railway load distribution market share, and with the new National Infrastructure Plan there is hope for growth in the next couple of years.
Industrias Peñoles is the second largest Mexican mining company, and the world leading producer of silver. The company took a blow due to the low metal prices throughout the year, especially the price of silver. Industrias Peñoles made the decision to mitigate the loss it was experiencing with silver by selling immense volumes of other metals such as, zinc and lead. Although Peñoles’ net sales rose 11.5% in comparison to 2014, its net utility decreased by 86.6%.
Minera Frisco, owned by Mexico’s richest man Carlos Slim, has taken the worst fall this year. Its gold and silver sales have dropped 12% and 24% this year in comparison to the previous year, and its net sales have decreased 2% in comparison to last year. Struggling to find a golden opportunity to restore the company, Slim has created several research programs to find innovative and profitable techniques for the processing of minerals. Frisco is also looking to innovation to help it out of the ditch, by reducing production, and following a continuous improvement model.
Mexican mining companies are trying to reach the light at the end of the tunnel, but as projects become more intricate, political and social risks rise, and the lack of qualified workers, it is sure to be a long road ahead. The combination of all of these elements has caused the adjournment of various projects, and for companies to carry out large cuts to their budgets. Nevertheless, the Mexican mining industry remains optimistic for the future, and is willing to put up a fight. Companies are constantly exploring alternatives to revamp their profitability, curtail operational costs, and develop strong and qualified work forces that will make their mines more efficient. The industry will remain hopeful, and will find ways to climb out of this slump by expanding and investing money into new projects, but one question remains: How long will it be until they see the light of day?
With information from: The Wallstreet Journal, Milenio, & Economiahoy