Industrialization and Private Enterprises in Mexico: 5: The Gains and Limitations of Indigenization Policy: Grupo México in the Nonferrous Metal Mining Industry

By Hoshino, Taeko | I.D.E. Occasional Papers Series, January 1, 2001 | Go to article overview

Industrialization and Private Enterprises in Mexico: 5: The Gains and Limitations of Indigenization Policy: Grupo México in the Nonferrous Metal Mining Industry


Hoshino, Taeko, I.D.E. Occasional Papers Series


Grupo México and the Indigenization of the Mining Industry

Grupo México Today

Grupo México is an indigenous enterprise group made up of a holding company of the same name that controls numerous subsidiaries operating in the nonferrous metal mining sector. Like the other industries examined in this book, the mining industry has become oligopolized. In the 1996 Expansión listing of the 500 largest enterprises, 11 companies in the mining sector (which in this chapter excludes petroleum) are listed. But the top two companies employ 74 per cent of the sector's workforce and account for 81 per cent of its total sales (Expansión, August 14, 1996). At the top of the list is Grupo México; second is Industrias Peñoles which like Grupo México is a creation of the government's indigenization program.

The holding company Grupo México was set up in 1994. Before that the group was under the control of the holding company Grupo Industrial Minera México (Grupo IMMSA). When the new Grupo México holding company was established, a multifaceted reorganization of this mining group took place. One facet was that two large-scale copper mining companies, Mexicana de Cobre and Cía. Minera de Cananea, which had been acquired by the group through the privatization of public enterprises and had been placed outside the group organization, were integrated under an intermediate holding company which held business subsidiaries under its control. Another facet was that foreign capital participation in the new organization was reduced to 26 per cent. Previously the holding company Grupo IMMSA had 100 per cent indigenous capitalization, but a foreign-owned enterprise, Asarco (discussed below), had continued to hold 34 per cent capital participation in the group's intermediate holding company even after indigenization. A third facet of reorganization was that foreign participation in the new organization was changed from the unlisted intermediate holding company to the listed holding company Grupo México. This move made it easier for Asarco to sell its stockholdings on the stock exchange and withdraw from Mexico. This organizational restructuring brought about a radical change in the mining industry's relationship with foreign capital investment that continued after indigenization.

Until World War II the mining industry was Mexico's main export industry, but today it no longer holds such importance. In 1993 the industry made up 1.0 per cent of the country's GDP and accounted for only 2.2 per cent of exports (INEGI 1995, pp. 7, 89). But while the figures for the mining industry are small as a portion of the country's GDP and exports, it has grown more important as a supplier of raw materials to domestic industries as the industrialization of Mexico's economy has progressed. The main consumption of nonferrous metals has been in industries like construction, machinery, automobiles, and electric machines which have been at the center of Mexico's industrialization (INEGI 1986, pp. 16, 21, 23, 25, 27). Because its role as a supplier of raw materials became so important for underpinning the country's industrialization, revitalizing the mining industry became a matter of government policy, and in the early 1960s the government adopted indigenization as the method for achieving this goal.

Decline of Mexico's Mining Industry and Indigenization

The history of mining in Mexico goes back to the Spanish colonial period. By 1600 Mexico had become one of the world's major silver producers (Bernstein 1964, p. 9), and it still is one today. But the important area of the mining industry today is not silver but nonferrous metals, especially copper, lead, and zinc which are mined primarily for industrial use. The formation of the nonferrous mining industry goes back to the start of the twentieth century when major U.S. mining enterprises undertook large-scale capital investments and a flourishing nonferrous metal mining and smelting industry arose. …

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