MEXICO - Energy & Mining
Rafael Villagómez Contreras founded CoMinVi, VillaSerre, as well as VilCo. During his career, he has invested in more than 15 companies from different sectors and industries including mining, finance, construction, agriculture, commerce, real estate, and services. He holds a degree in business administration from the Universidad Iberoamericana.
As we have seen over the last two years, the mining sector has entered a bullish phase. The pandemic led to an increase in the demand and price of precious metals, such as gold. We are a contractor for underground works; we do not do open pit work. Most of our clients are in precious metals such as gold, copper, and zinc. Thus, with these prices, many projects that were not profitable before become extremely profitable. There are more projects in the market as the potential for earnings has increased. That is why we have had a great deal of work over the last 18 months. We have been active during that period. Some projects, however, were suspended due to the pandemic. We maintained in operation about 65% of our projects. Fortunately, the mining industry was classified as an essential sector of the economy, so it could continue operations despite the impact of the pandemic under certain regulations. This bullish period could potentially last at least two years. The most important factor would be that the interest rates in the US should not increase. Due to the high level of debt of countries and the need to boost economic recovery, I do not think interest rates will increase in the near future. At the same time, this allows investors to enter in a sector that is more profitable than investing in a sovereign bond. We decided to invest heavily in machinery and purchased 87 machines from Epiroc, about 35 from Sandvik, and another 20 from Resemin, which is from Peru. We expect them all to be delivered by 1Q2023, which will allow us to respond to the current demand of work that we currently have.
2021 and 2022 will be years in which investments will take place. Many projects are conducting their investments to start producing. The first state is exploration, followed by the development of the mining model, engineering, and the feasibility projects. After that, we develop the infrastructure to be able to start mining. Many projects are for three to five years, so for 2022, 2023, and 2024 we will be developing projects and will start with the initial operations to begin production.
Our strength is our people. People are the most important asset of any company. Everyone is extremely important, from assistants to miners and the managing director. We are all part of the same value chain. We provide our workers all the required equipment to be productive.
There are some important factors that we will witness in the coming years. One involves the drill jumbo, which is a rock drilling machine. There are also some changes involving some machines that use diesel, and they will begin to use electricity in their operation. Meanwhile, our equipment will become more efficient in terms of water consumption.
We have nine projects in Mexico, and each of them poses important challenges. The most important challenge is not to have any accidents, which are related to time lost. We have to meet our quality standards, which are what customers seek. We have to provide an excellent logistics service, because mines are usually located in remote areas. It is important to have the materials for repairs on time. That is essential to ensure the supply of strategic materials. It is also important to ensure work safety. The most important factors of our operation is that our financials and our workforce are solid.
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