Copper miners doubt Mexico will seek full open-pit ban, sparing current projects

Big copper miners doubt that a ban on open pit mining in Mexico would snare existing projects, shrinking the impact of potential policy changes by the country's incoming administration, according to company executives on third-quarter earnings calls.

Claudia Sheinbaum, Mexico's newly inaugurated president, also list of 100 pledges any interest in her predecessor's proposal to end open bit mining, and copper miners engaged with the government do not see the rule advancing, at least in a comprehensive form.

Copper CEOs signaled some optimism over the issue on recent earnings calls that took place shortly after Sheinbaum's inauguration. So far, Mexico's regulatory turmoil has left their project plans unscathed, they said.

"We've been following it closely, and as far as we know ... what has been in discussion ... is not necessarily advancing," Leonardo Contreras, finance chief of Grupo México SAB de CV's mining division, said on an Oct. 23 earnings call in response to a question about open pit mining.

Holding steady

Mining executives expressed confidence that any regulatory changes would not touch existing concessions, even if Mexico pursues the policy. They also doubted that a potential ban would snarl existing project plans.

Contreras said that if Mexico moved ahead with open pit mining restrictions, they would only apply to new concessions. While that would have an effect on new mining projects, a less comprehensive approach would leave organic growth plans untouched, he said.

"We won't have any issue at all going forward," Contreras said.

Likewise, Raul Ruisanchez, CFO of Southern Copper Corp., a separately listed subsidiary of Grupo Mexico, said a ban would not hit existing concessions.

"That's our understanding on this matter," Ruisanchez said on the company's earnings call Oct. 23.

Optimism rises

Other big miners also made it clear that they were not changing course in Mexico.

Teck Resources Ltd. said it remained committed to drawing up open pit mining plans for its San Nicolas project, and the company's management expressed muted optimism over the incoming Sheinbaum administration.

There still remains "a level of uncertainty" over the ban, but "the tone has moved to a slightly more positive position, or alternatively a slightly less negative position, depending on how you look at that," Teck President and CEO Jonathan Price said on an Oct. 24 earnings call.

Price said that open cut mining — as opposed to underground mining — is the better method to generate project returns at San Nicolas and said Teck continued to pursue permits for the project on that basis.

"We are hopeful of a resolution for open cut mining, particularly in the context of San Nicolas in due course," Price said.