MINING FINANCE / INVESTMENT

Mexican mine investment to decline in 2009, 2010

Investment in new exploration and expansion projects could fall as much as 25,3% in 09 and even further in 2010 - around 30 000 jobs have already been lost

Author: Mica Rosenberg
Posted: Friday , 25 Sep 2009

CUERNAVACA, Mexico (Reuters) - 

Investment in new exploration projects and mine expansions in Mexico will drop 25.3% in 2009 to $2.73 billion, compared with a year ago, as the financial crisis hits credit and metals prices, the national mining chamber said on Thursday.

Sergio Almazan, head of the chamber, said investment in 2010 could drop even further to as little as $1.7 billion, 37.7% less than expected in 2009.

In 2008, when some metals prices were hitting record highs on international markets, investment in Mexico, a major copper and silver producer, reached $3.66 billion, Almazan said.

"The fall is in exploration projects in precious metals, copper (and) zinc ... Some expansion projects have also been put on hold," Almazan told a news conference.

Around 30,000 jobs in the sector have been lost due to the drop in investment and the slow down in the industry, he said.

But Goldcorp's (G.TO)(GG.N) massive Penasquito gold mine, which will be Mexico's largest, is on track to begin commercial output on Jan. 1, the company's Mexico director said.

Salvador Garcia told Reuters the mine would still be developed within the planned budget.

The mine will produce around 150,000 ounces of gold in 2010, and output at all Goldcorp's Mexican mines will be around 700,000 ounces in 2010, Garcia said in an interview.

Once Penasquito reaches peak production in about five years the mine is expected to produce 500,000 ounces of gold a year over its 22-year life. (Reporting Mica Rosenberg; Editing by David Gregorio)

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