Eight Iron Clad Reasons to SELL ALL YOUR SILVER MINING STOCKS IF THEY OPERATE IN MEXICO.
Silver Under Siege: Trump’s ‘Soft’ Invasion and Mexico’s Mining Turmoil Collide
Donald Trump's transition team is reportedly considering a "soft invasion" of Mexico, focusing on covert military actions against drug cartels, raising concerns amid a backdrop of increasing nationalization in Mexico's resource sectors. Factors such as the nationalization of oil and lithium, the decline in silver ore grades, and regulatory challenges for miners exacerbate the situation for silver mining operations in Mexico.
La Cuarta Transformación: This campaign trail began with the announcement of three previous transformations.
Nationalization of Oil: The government had taken control of oil resources back in the 1930s and the new administration ( Recently formed Morena Party. First under AMLO and now under Claudia Sheinbaum Pardo, President & María Luisa Albores González, Secretary of Mining and Environment)
Nationalization of Lithium: Lithium resources are now state-owned (2022)
Nationalization of Electric Utilities: Electric utilities have also been nationalized (2023)
Seizure of Vulcan Materials Port: AMLO's administration seized control of a North American-owned port (2024)
Claudia Sheinbaum's Mining Ban: She implemented an open-pit mining ban on silver.
Declining Silver Ore Grades: Silver ore grades in Mexico are on the decline.
Trump's Planned "Soft" Invasion: The prospect of Trump's military strategy adds to the challenges faced by silver miners.
Summarized below
Mexico's previous 3 transformations involved overthrowing oppressive regimes:
the War of Independence (1810-1821) ended Spanish colonial rule
the Reform War (1858-1861) separated Church and State and implemented progressive land reform breaking up tracts of land that were from Spanish land grants.
and the Mexican Revolution (1910-1917) overthrew the Porfirio Díaz dictatorship and opened the door to nationalize oil just a few years later.
The Fourth Transformation, led by AMLO, aims to benefit the Mexican people over the privileged few, focusing on a bottom-up approach. AMLO, Claudia Pardo, and María Luisa Albores González formed their own grassroots populist party called MORENA comprised of campesinos, factory workers, farm workers, activists, environmentalists, University Professors, student activists, peasants, intellectuals and socialists with key focus on Nationalizing Silver and Gold.
¡Los recursos de México pertenecen al pueblo de México!
translates to
Mexico's resources belong to the people of mexico !
Key phrases associated with this movement include "guardians of the territory" and "defenders of the territory," and “Secure Mexico’s Energy Future,” “Mexico’s resources belong to the People of Mexico” emphasizing national sovereignty.
The Transformation 4th seeks to secure Mexico's energy future by nationalizing resources and promoting self-sufficiency. Silver is highlighted as a critical mineral for future energy, including solar energy and silver batteries. The nationalization of silver is a strategic move to ensure a stable supply of this crucial resource for Mexico's energy needs.
AMLO's policies, now continued by Claudia Sheinbaum Pardo and María Luisa Albores González, are strategic in nature. They emphasize and focus on reducing foreign investment and asserting state control over key industries, reflecting a carefully planned approach to economic and industrial development.
For example, in his final week in office, AMLO seized control of Vulcan Materials, a U.S.-owned company that plays a significant role in Mexico's energy future due to its silver mining operations. AMLO did so unilaterally. What did he seize, everyone? A mine owned by Vulcan Materials. All their campaign speeches (anyone can search on Twitter) by going through the tweets of the MORENA party or their Dept of Environment are based on setting up the stage for their final phase, which will be Mexico’s move to Nationalize Silver as part of the plan to restore mineral wealth to the people of Mexico.
This action aligns with the Fourth Transformation's goal of prioritizing national interests over foreign corporations.
As these developments unfold, the outlook for silver mining in Mexico continues to worsen.
Mexico’s intensifying Jurisdictional Risk
The landscape of silver mining in Mexico is increasingly fraught with jurisdictional risks for foreign investors, particularly Canadian companies heavily invested in this sector. As the world's leading silver producer, Mexico accounts for approximately 24% of global silver output, making it a critical supplier for industries reliant on this metal, especially in the United States, which depends on Mexican silver for solar panels and electric vehicle (EV) batteries. However, recent political developments have raised significant concerns about the stability and future of silver mining operations in the country.
Political Landscape and Nationalization Risks
Under President Andrés Manuel López Obrador (AMLO), Mexico has seen a wave of nationalization efforts that threaten the operational viability of foreign-owned mining companies. The nationalization of lithium and oil, along with proposed bans on open-pit mining, reflect a broader trend of increasing state control over natural resources. AMLO's administration has enacted stringent regulations that require a majority Mexican ownership in mining ventures, effectively sidelining foreign investors and raising fears of further nationalization in the silver sector.
These changes come at a time when the demand for silver is surging due to its essential role in green technologies. The U.S. is particularly reliant on Mexican silver, with 79% of its supply sourced from south of the border.
As such, any disruptions in this supply chain could have far-reaching implications for industries dependent on silver, including renewable energy and battery manufacturing.
Declining Silver Grades and Increased Scrutiny
Compounding these jurisdictional risks is the troubling trend of declining silver ore grades in Mexico. As mines become less productive, the economic viability of continued operations is called into question. This decline not only threatens current production levels but also discourages new investments needed to explore and develop additional resources.
The recent reforms to mining laws have also introduced severe penalties for non-compliance with environmental regulations, further complicating the operational landscape for miners.
Moreover, as AMLO's tenure draws to a close, there is uncertainty about his successor Claudia Sheinbaum Pardo's policies.
She has indicated a commitment to continuing AMLO's environmentally-focused agenda, which may include further restrictions on mining activities.
This creates an unpredictable environment for investors who must navigate not only existing laws but also potential future changes that could impact their operations
International Relations and External Pressures
The geopolitical landscape adds another layer of complexity to the situation. Reports indicate that former U.S. President Donald Trump is planning a "soft" invasion of Mexico, which raises concerns about potential instability and increased scrutiny on cross-border investments.
Such developments could exacerbate existing tensions between foreign investors and the Mexican government
In conclusion, the jurisdictional risks associated with silver mining in Mexico are escalating due to a combination of nationalization efforts, declining ore grades, and an unpredictable political climate. For Canadian and other foreign investors, these challenges pose significant threats to their operations and profitability in a market where Mexico remains the dominant player. As demand for silver continues to grow globally, it is imperative that stakeholders carefully assess these risks and consider their long-term strategies in navigating this increasingly volatile environment.
The future of silver mining in Mexico hangs in the balance as both political will and market dynamics evolve unpredictably
https://www.cruxinvestor.com/posts/mexicos-pivotal-election-could-boost-prospects-for-silver-miners-all-eyes-for-mining-policy-shifts
https://www.the-independent.com/news/world/americas/us-politics/trump-invade-mexico-drugs-fentanyl-b2654992.html
https://www.mining.com/web/mexico-mining-investment-seen-stable-at-5-billion-in-2024-says-industry-group/
https://www.thepinknews.com/2024/11/28/donald-trump-mexico-invasion-claims/
https://www.bnamericas.com/en/news/regulatory-overhaul-will-weigh-on-mexicos-mining-sector---moodys
https://newrepublic.com/post/188889/trump-team-terrifying-debate-invade-mexico
https://www.reuters.com/markets/commodities/mexico-mining-investment-seen-stable-5-billion-2024-says-industry-group-2024-07-10/
https://mexicobusiness.news/policyandeconomy/news/claudia-sheinbaum-dismisses-us-soft-invasion-proposal
https://www.yahoo.com/news/us-invasion-mexico-cartels-rejected-165339125.html
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