[Mexico] New labour law affects production for metal miner Fresnillo

[Mexico] New labour law affects production for metal miner Fresnillo
29 Oct 2021

Disruption from new labour laws limiting the use of contractors at underground mines in Mexico has resulted in metal miner Fresnillo reporting a fall in production, The Times reports.

The precious metals producer said it was still confident that it could hit full-year production guidance, thanks to factors including efficiency measures and a strong performance at one of its open-pit mines.

FTSE 100 producer Fresnillo was founded in 2008, it is the world’s biggest primary silver producer and Mexico’s largest gold producer. It operates four underground and two open-pit mines in the country.

On October 27 Fresnillo announced that silver production in the third quarter fell by 4.7 per cent on the same period last year, while gold production was broadly flat.

Octavio Alvídrez - Fresnillo’s chief executive - said the producer had seen “limited short-term disruption as a result of the labour reforms in Mexico”, which affected its Fresnillo and Saucito mines in particular.

Analysts at broker Jefferies said that the two mines had been “acutely impacted” with production down from the second quarter by 19 per cent and 18 per cent respectively.

Mexico introduced new rules in September which restrict companies’ ability to subcontract labour. Fresnillo said it had taken “significant steps to prepare” by trying to hire a proportion of its contractor workforce. However, “uptake has varied, with underground mines more affected due to a higher number of contractors on site”. 

This had, in turn, caused disruption to equipment availability and utilisation rates.

Fresnillo said it was recruiting, training and investing in new equipment and expected “volumes to gradually return to a normalised level during 2022”.


Source: The Times

(Quotes via original reporting)

Disruption from new labour laws limiting the use of contractors at underground mines in Mexico has resulted in metal miner Fresnillo reporting a fall in production, The Times reports.

The precious metals producer said it was still confident that it could hit full-year production guidance, thanks to factors including efficiency measures and a strong performance at one of its open-pit mines.

FTSE 100 producer Fresnillo was founded in 2008, it is the world’s biggest primary silver producer and Mexico’s largest gold producer. It operates four underground and two open-pit mines in the country.

On October 27 Fresnillo announced that silver production in the third quarter fell by 4.7 per cent on the same period last year, while gold production was broadly flat.

Octavio Alvídrez - Fresnillo’s chief executive - said the producer had seen “limited short-term disruption as a result of the labour reforms in Mexico”, which affected its Fresnillo and Saucito mines in particular.

Analysts at broker Jefferies said that the two mines had been “acutely impacted” with production down from the second quarter by 19 per cent and 18 per cent respectively.

Mexico introduced new rules in September which restrict companies’ ability to subcontract labour. Fresnillo said it had taken “significant steps to prepare” by trying to hire a proportion of its contractor workforce. However, “uptake has varied, with underground mines more affected due to a higher number of contractors on site”. 

This had, in turn, caused disruption to equipment availability and utilisation rates.

Fresnillo said it was recruiting, training and investing in new equipment and expected “volumes to gradually return to a normalised level during 2022”.


Source: The Times

(Quotes via original reporting)