Industrias Peñoles is a Mexican national champion, and one of the only miners listed on the Mexican Stock Exchange. This week, Mexico Mining Review interviewed Fernando Alanís, the company’s Director General to get his opinion on the status of the national industry and how other operators can follow in Peñoles’ footsteps to become an international reference
Q: How do you achieve long-term goals considering the volatility in the national and international context?
A: Our company is over 100 years old and is used to constant change and turbulence. We even had to overcome the Mexican revolution. Peñoles finds that volatility is a normal part of the industry. The landscape may always be in flux but the country’s mineral deposits will always remain, as will demand for this material.
We are strong believers in having a long-term vision and making sure everything is congruent with our goals. With a clear vision and consistency in commitments, great things can be achieved. From the beginning, we knew that we wanted to be an international leader in the industry and this vision is reflected in everything we do.
There are four main factors that differentiate us from the rest: the quality of our products, our processes, the excellence of our team and the ethical manner in which we manage our business. To achieve excellence, an operator must not only demand it from its collaborators but also incorporate processes that uphold this benchmark from recruitment to training and development. This applies to everything. It sounds simple but congruence is not easy to put into practice.
Q: How would you describe the key factors behind Industrias Peñoles’ success?
A: There are four key principles that companies should always invest in no matter the price cycle to assure success: security, technology, training and maintenance. These elements are sacred to us and even in times of dire budget restrictions, we do not cut costs in these divisions. We understand the importance of having trained people who know how to use technology safely. There is no other way to do business.
We are investing in developing our main training facility in Velardeña where we will have state-of-the-art technology and simulators. We use cabins to educate our operators for several weeks and have them simulate a variety of situations that are likely to occur in every day operations. The training center will certify operators through governmental programs that teach them how to properly handle machines and carry out maintenance. This training helps keep our mines safe and productive. It is part of the secret recipe behind our high levels of production, reduced costs and employee retention.
Q: What can Mexican mining companies do to stay afloat considering the rise in foreign participation?
A: The Mexican mining industry has always been dominated by a handful of companies as very few choose to invest large amounts of capital in long-term objectives. Unfortunately, smaller companies often prefer short-term wealth, which is counterproductive in an industry like mining. This is why only a small number of companies have been able to grow to a considerable size in Mexico. But we should not see the rise of international companies as a bad thing either because they bring best practices to Mexico and partner up with small companies to help them develop their projects. Mexico has much to offer the industry in terms of well-trained and hardworking people. We just need to properly orient this talent. I also believe that Mexico is up to par with international best practices when it comes to sustainability and security.
Q: What does the country need to become a more competitive mining jurisdiction?
A: To experience a boost in the industry, Mexico truly needs clearer public policies. The automotive industry is a good example of this. Many years ago, someone saw the potential Mexico had in the automotive industry and decided to establish a series of public policies to incentivize the development of this sector. The country now plays an important role in the automotive sector thanks to the vision this person established. The mining industry in Mexico needs a similar set of actions to take full advantage of the potential of the mining sector.
To see more projects in the country, we need less jurisdictional volatility to incentivize investment because mining law plays a crucial role in competitivity. The results of the Fraser Institute Report are a clear example of this. In 2011, Mexico’s mining sector experienced US$15 billion in investment, a record high, while in 2017 it dropped to US$3 billion thanks to the changes in the law. Considering that the industry requires a long-term investment, public policies should also have a long-term vision.
One of the biggest issues is that exploration is no longer deductible in a year, which is something common in countries like Australia and Canada. Exploration is the core of mining and a drop in investment will negatively impact the industry. These kinds of policies need to be adjusted.
This is an exclusive preview of the 2019 edition of Mexico Mining Review. If you want to get all the information, plus other relevant insights regarding this industry, pre-order your copy Mexico Mining Review or access our digital copy of the 2018 edition.