Resource Intelligence Country Report: Mexico

Did you know that Mexico is the #1 producer of smart phones in the world? And 82% of Mexicans over 14 have a cell phone?
Or that high tech manufacturing represents almost 20% of Mexico's GDP?
And that they are the 2nd largest producers of TV's in the world, and the largest producer of white goods? Literally one of every 3 fridges, stoves and washing machines is manufactured in Mexico!
Here is another shocker -- Mexico produces more automobiles than Canada or the USA.
Welcome to Country Reports. Because location risk is the biggest gamble in mining, assumptions can be expensive either by being too optimistic or pessimistic. Our objective with this program is to help investors understand jurisdictional or location risk.
So come with us today to Mexico where in the next 10 minutes we'll show you that Mexico is no sleepy hollow of sombreros and burritos -- it is dynamic, and it's changing fast. And in Mexico, mining is embraced as an important source of jobs, revenue and national identity.
Mining Policy: Laying the groundwork for change.
In Mexico, mining is big and it is efficient. Mining policies pertaining to permitting and taxation are largely centralized—they are federal responsibilities. This has been great for investment in the mining industry.
Here's an example. SilverCrest Mines, Mexico's newest producer, drilled its first drill hole just four years ago and is now in production. It could generate up to $30 million in profits annually, sufficient to repay the company's total capital costs in under a year.
Here's another example. During construction, Goldcorp's Penasquito operation was the biggest construction project in Mexico. It cost an astounding $1.6 billion dollars to build. Its size is monumental. Each and every day 120,000 tonnes of rock are processed. Penasquito has a mine life of 22 years based on current resources. Each pit is a kilometer in width. The crushed ore conveyor is over a kilometer long.
But these foreign owned projects were not always able to operate so efficiently in Mexico. In 2003, there were 74 foreign mining companies operating in Mexico. At last count there were 263.
How did this growth happen? Changes to mining law in 1990 led to a giant leap forward for mining investment in Mexico. Foreign capital was finally authorized to participate in 100% of the stock of mining corporations. Today foreign companies work under the same taxation rules as domestic miners and pay 34% tax on distributed profits only, not on reinvested profits.
To further entice miners, Mexico's 15 per cent value added tax has been eliminated in all stages of gold mining. Also, mining companies are exempt from the country's asset tax for the first five years. There are even diesel fuel consumption tax credits for miners in Mexico.

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