Mining in Mexico suffered strong impacts from the Covid-19 pandemic in the first half of 2020, according to a report by the Bank of Mexico (Banxico).
Specifically regarding non-oil mining, the sources consulted by Banxico in all regions highlighted the suspension of activities during April and May, since initially practically the entire sector was declared a non-essential activity during the health emergency.
In particular, in the north, the executives of companies in the mining sector reported that barite production volumes continued to be low due to high levels of barite inventories in Texas refineries and, to a lesser extent, as a result of the decrease in demand for Pemex.
In the same sense, the demand for iron registered a significant decrease caused by the contraction of the steel industry in the United States and Mexico, which they associated with the lower level of activity in automotive production and construction.
Also due to the suspension of activities in this last sector, they indicated a decrease in the acquisition of stone materials during the health emergency.
Mining
On the other hand, in the north central region, the sources consulted referred to the suspension of public investment projects, as well as the temporary closure of small housing developers as factors that explained the decrease in the demand for construction materials.
In turn, the suspension of activities of one of the most important zinc mines in the world, located in Zacatecas, negatively impacted the production of this mineral and the demand for services.
In this case, the sources consulted associated the suspension of activities with lower profitability as a result of the abrupt fall in the price of this mineral in the context of the pandemic.
Likewise, in the production of precious metals, in San Luis Potosí, a mine reported restrictions in its activity due to the sanitary measures that were required to restart operations.
In the case of the center, the sources consulted from the mining industry mentioned that the fall in demand for minerals for industrial use, such as copper, zinc and gold, and for stone material, such as sand, gravel and tezontle, was explained by the suspension of activities in manufacturing and private construction, respectively.
Precious metals
In contrast to the above, the sources consulted stated, in general, that the rebound in international prices of gold, and to a lesser extent of silver, partially offset the effect of the lower volume of production of these metals on the income from their sale .
The managers interviewed also commented that the extraction of minerals demanded by sectors classified as essential continued during the health emergency.
In this regard, in the north they highlighted the operational continuity of a lime supplier mine for the food industry, particularly for the production of corn flour and for the carbonation of beverages.
Likewise, in the central region, the sources mentioned that the uninterrupted advance of the large infrastructure projects of the federal government supported the demand for stone material.
After non-oil mining was incorporated into essential activities in the second half of May, this activity showed some recovery in all regions, in the opinion of the managers interviewed, although its level remained below that observed in the first months of the year.
In this regard, in the north center, the managers of companies in the mining sector commented that in Durango exploration processes began in some mining areas in the second half of May, which in turn boosted the demand for contractors and related services. .
In addition, some executives mentioned that the demand for products such as lime and cement registered an increase since construction was considered an essential activity.
