MEXICO CITY (Reuters) - Mexican miners said on Monday 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.
With 738 active exploration projects in Mexico, the ground is fertile for acquisitions, said Eduardo Luna, the director of precious metals miner Primero. “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,” Luna said at a mining chamber event in Mexico City.
“Definitely there will be mergers and acquisitions,” he said, without naming specific companies.
Only a third of Mexican territory has been explored for mining, so there is plenty of room for growth in the industry that has long been overshadowed by Mexico’s oil wealth.
The most advanced exploration projects are already owned by the major mining companies, including Grupo Mexico (GMEXICOB.MX), Goldcorp G.TO and Fresnillo (FRES.L), the precious metals arm of Penoles and the world’s largest primary silver producer, the chamber’s director Sergio Almazan said.
Investment will jump 7.3 percent in 2011 compared to last year’s $4.1 billion, the boost driven in part by expansion plans at Grupo Mexico’s giant Cananea mine, Almazan said.
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 last September.
“In copper, we hope to return to the levels (of production) we had in 2007,” before the strike began, Almazan said.
Mexican base metals miner Penoles PENOLES.MX also said on Monday it would invest $200 million in a new primary zinc mine in the state of Durango, which it hopes to have up and running by the end of 2012 or early 2013.
“We just announced an investment of $200 million for a new mine ... a primary zinc mine, that has a little bit of lead and silver ... Velardena, in the state of Durango,” Fernando Alanis, chief executive officer of Industrias Penoles, told Reuters at the 2011 International Zinc Conference in Cancun.
The Velardena mine will have a grinding mill capacity of 6,000 (short) tons of zinc per day, second only to the company’s flagship zinc mine, Madero, which has capacity of 7,000 tons per day.
Mexico is the No. 7 zinc producer in the world, with 4.3 percent of the world’s supply.
With new projects 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, Almazan said.
Gold production is also expected to rise 12.5 percent this year to around 2.7 million ounces.
Reporting by Mica Rosenberg in Mexico City and Chris Kelly in Cancun; Editing by Andrew Hay