Developing Mexican Silver-Zinc Production

 





About Mexico

 

Introduction

The United Mexican States (Estados Unidos Mexicanos), or commonly Mexico (México), is a federal constitutional republic in North America. It is bounded on the north by the United States of America; on the south and west by the North Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of Mexico. The United Mexican States is a federation comprising thirty-one states and a federal district, the capital Mexico City, which is one of the world's most populous cities.


Covering almost 2 million square kilometers, Mexico is the fifth-largest country in the Americas by total area and the 14th largest in the world. With an estimated population of 109 million, it is the 11th most populous country and the most populous Spanish-speaking country in the world.


As a regional power and the only Latin American member of the Organization for Economic Co-operation and Development (OECD) since 1994, Mexico is firmly established as an upper middle-income country.


Mexico is the 12th largest economy in the world by gross domestic product (GDP) by purchasing power parity. The economy is strongly linked to those of its North American Free Trade Agreement (NAFTA) partners.


Form of Government

The Mexican government is representative, democratic and republican based on a congressional system according to the 1917 Constitution. The constitution establishes three levels of government: the federal Union, the state governments and the municipal governments. All officials at the three levels are elected by voters through first-past-the-post plurality, proportional representation or are appointed by other elected officials.


The federal government is constituted by the Powers of the Union, the three separate branches of government:
  • Legislative: the bicameral Congress of the Union, composed of a Senate and a Chamber of Deputies, which makes federal law, declares war, imposes taxes, approves the national budget and international treaties, and ratifies diplomatic appointments. >Executive: the President of the United Mexican States, who is the head of state and government, as well as the commander in chief of the Mexican military forces. The President also appoints, with Senate approval, the Cabinet and other officers. The President is responsible for executing and enforcing the law, and has the authority of vetoing bills.
  • Judiciary: The Supreme Court of Justice, comprised by eleven judges appointed by the President with Senate approval, who interpret laws and judge cases of federal competency. Other institutions of the judiciary are the Electoral Tribunal, collegiate, unitary and district tribunals, and the Council of the Federal Judiciary.

All elected executive officials are elected by plurality (first-past-the-post). Seats to the legislature are elected by plurality and proportional representation at the federal and state level. The Chamber of Deputies of the Congress of the Union is conformed by 300 deputies elected by plurality and 200 deputies by proportional representation with closed party listsfor which the country is divided into 5 electoral constituencies or circumscriptions. The Senate is conformed by a total of 128 senators: 64 senators, two per state and the Federal District elected by plurality in pairs; 32 senators assigned to the first minority or first-runner up (one per state and the Federal District), and 32 elected by proportional representation with closed party lists for which the country conforms a single electoral constituency.



According to the constitution, all constituent states must have a republican form of government composed of three branches: the executive, represented by a governor and an appointed cabinet, the legislative branch constituted by a unicameral congress and the judiciary, also called a Supreme Court of Justice. They also have their own civil and judicial codes.


In the 2006–2009 Congress of the Union, eight parties are therein represented; five of them, however, have not received neither in this nor in previous congresses more than 4% of the national votes. The other three parties have historically been the dominant parties in Mexican politics:

  • National Action Party (Partido Acción Nacional, PAN): a center-right conservative party founded in 1939.
  • Institutional Revolutionary Party (Partido Revolucionario Institucional, PRI): a center party that ascribes to social democracy, founded in 1929 to unite all the factions of the Mexican Revolution. Prominent right-wing as well as left-wing Mexican politicians have been members of the party.
  • Party of the Democratic Revolution (Partido de la Revolución Democrática, PRD): a center-left party founded in 1989 by the coalition of socialists and liberal parties, the National Democratic Front which had presented the candidacy of Cuauhtémoc Cárdenas in the 1988 elections.

The PRI held an almost hegemonic power in Mexican politics since 1929. Since 1977 consecutive electoral reforms allowed opposition parties to win more posts at the local and federal level. This process culminated in the 2000 presidential elections in which Vicente Fox, candidate of the PAN, became the first non-PRI president to be elected in 71 years.


In 2006, Felipe Calderón of the PAN faced Andrés Manuel López Obrador of the PRD in a very close election (0.58% difference), in a system without a second-ballot. On September 6, 2006, Felipe Calderón was declared President-elect by the electoral tribunal. His cabinet was sworn in at midnight on December 1, 2006 and Calderón was handed the presidential band by outgoing Vicente Fox at Los Pinos. He was officially sworn as President on the morning of December 1, 2006 in Congress.


The Economy

Mexico has a free market mixed economy, and is firmly established as an upper middle-income country. It is the 12th largest economy in the world as measured in Gross Domestic Product in purchasing power parity. After the 1994 economic debacle, Mexico has made an impressive recovery, building a modern and diversified economy. Recent administrations have also improved infrastructure and opened competition in seaports, railroads, telecommunications, electricity generation, natural gas distribution and airports. Oil is Mexico's largest source of foreign income.


According to the director for Mexico at the World Bank, the population in extreme poverty has decreased from 24.2% to 17.6% in the general population and from 42% to 27.9% in rural areas from 2000-2004. Nonetheless, income inequality remains a problem, and huge gaps remain not only between rich and poor but also between the north and the south, and between urban and rural areas. Sharp contrasts in income and Human Development are also a grave problem in Mexico. The 2004 United Nations Human Development Index report for Mexico states that Benito Juárez, a district of the Distrito Federal, and San Pedro Garza García, in the State of Nuevo León, would have a similar level of economic, educational and life expectancy development to Germany or New Zealand. In contrast, Metlatonoc, in the state of Guerrero, would have an HDI similar to that of Syria.


Many of the positive effects in poverty reduction and the increase in purchasing power of the middle class are attributed to the macroeconomic stability pursued by the last two administrations. GDP annual average growth for the period of 1995–2002 was 5.1%. The economic downturn in the United States also caused a similar pattern in Mexico, from which it rapidly recovered to grow 4.1% in 2005 and 3% in 2005. Inflation has reached a record low of 3.3% in 2005, and interest rates are low, which have spurred credit-consumption in the middle class. The Fox administration also provided monetary stability: the budget deficit was further reduced and foreign debt was decreased to less than 20% of GDP. Along with Chile, Mexico has the highest rating of long-term sovereign credit in Latin America. Poverty in Mexico is further reduced by remittances from Mexican citizens working in the United States of America, which reaches US$20 billion dollars per year and is the second largest source of foreign income after oil exports.


Approximately 90% of Mexican trade has been put under free trade agreements with over 40 countries, of which the North American Free Trade Agreement remains the most significant. Almost 90% of Mexican exports go to the United States and Canada and close to 65% of its imports come from these two countries. Other major trade agreements have been signed with the European Union, Japan, Israel and many countries in Central and South America. As such, Mexico has become a major player in international trade and an export power. Measured in the dollar value of exports, Mexico was the 15th largest exporter in the world—tenth if the European Union is treated as a single entity. Mexican exports roughly equal the total exports of all Mercosur members together, Venezuela inclusive.


Ongoing economic concerns include the commercial and financial dependence on the US, low real wages, underemployment for a large segment of the population, inequitable income distribution (the top 20% of income earners account for 55% of income), and few advancement opportunities for the largely Amerindian population in the impoverished southern states. Lack of structural reform is further exacerbated by an ever increasing outflow of the population into the United States, decreasing domestic pressure for reform.


The Mining Industry

Mexico is a major producer of silver, base metals and gold. It is still a leading producer of silver, celestite and bismuth, accounting for 17%, 38% and 29% of the world production respectively. The country is ranked among the world's top ten in barite, manganese, salt, lead and zinc production. Base metals such as zinc and lead are important products in the country's mining sector. Silver is generally produced as by products of base metal and gold mining activities. Due to the polymetallic nature of many of Mexico's mineral deposits, careful attention is required to effectively extract all the metals economically.


During the Asian crisis and resultant commodity price slump, Mexico's mining industry fared badly compared to that of its other North American neighbours and most of the country's mining sectors have registered declines in production.


Mexico is the currently attracting significant foreign investment, in particular from Canadian (43%) and American investors (39%). Foreign investment in Mexico's mining industry has slumped to $700 million, after $800 million was spent in 1999. Of this amount $111 million was spent on exploration. The total number of foreign companies investing in Mexico is estimated at 440, of which 360 are American or Canadian.


Mexico's mineral industry, represented by the Consejo de Recursos Minerales (or Mineral Resources Council), is still in the process of transferring mining and mineral leases to the private sector. The Secretaria de Comercio y Fomento Industrial (SECOFI) or the Ministry of Commerce and Development is responsible formining national policy and the promotion and regulation of the mining industry.


Mexico's mining industry can be split into three categories:

  1. large domestic producers,
  2. small domestic producers
  3. and foreign firms.


There are four major domestic producers, Industrias Peñoles (precious and base metals and world's largest producer of refined silver), Grupo Industrial Minera Mexico (responsible for 90% of Mexico's copper production), Empresas Frisco and Luismin.


The main mining provinces in Mexico are Sonora, Coahuila, Zacatecas, Chihuahua, Baja California Sur, San Luis Potosí, Durango and Guanajuato.


Mining Legislation

The Mining Law, or Ley Minera, is the section of legislation that govern’s Mexico’s mining sector. The General Directorate of Mines (GDM), under the authority of the General Mining Co-ordinator, has the authority to enforce the Mining Law and its regulations.


Mexican mining law offers the following advantages:

  • It allows direct foreign investment with up to 100% ownership of the capital stock.
  • Exploration concessions have a six year life.
  • Exploitation concessions have a term of fifty years. Such concessions may be further extended for the same term.
  • There are no limits for mining concession area.
  • Exploration concessions shall be substituted by one or more exploitation concessions.
  • It allows private sector participation in minerals previously considered as exclusive for the government (sulphur, phosphorus, potassium, iron ore and coal).
  • The general guidelines issued by the concession granting bidding for non-incorporated assignations are established. The concept of economic counterproposal is added.
  • Timing and authority's answers to the canceling of concessions, or substitutions obtained in a bidding are established, and the same applies to cases when the bidding was declared deserted.


For details on the Mining Industry in Mexico, refer to: United States Geological Survey Mineral Yearbook - The Mineral Industry of Mexico - 2005 by Ivette E. Torres.

 

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