Announcement of World Bank Lends Forty Million Dollars to Develop Mexico’s Rich Mining Potential on March 27, 1980

,· FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 80/68 March 27, 1980 WORLD BANK LENDS $40 MILLION TO DEVELOP MEXICO'S RICH MINING POTENTIAL The World Bank has approved a $40 million loan to help Mexico exploit the full potential of its mining resources, generating additional employment, especially among relatively low income groups in outlying areas. The loan will support a. small- and medium-scale mining developme~t project with an estimated total cost of $107 million. The project will pro- vide financial and technical assistance to small- and medium-scale enterprises in the mining sector to help expand their explorcition, mine development and production programs. It will also help support the institutions assisting mining enterprises. Medium- and long-term loans wi 11 be provided to small- and medium- size mining enterprises to finance assets required to increase production • capacity. Equipment will be leased on a long-term basis, with option to purchase. Credit will also be provided to enterprises for ore reserve de- velopment, both on a risk-sharing and secured basis. About 10 regional mineral beneficiation plants will be constructed to process minerals pro- duced by the mining enterprise. Mexico's endowment of mineral resources is substantial; about 90% of its territory shows geological anomalies suggesting mineral potential. Yet only a small fraction of it has so far been explored for minerals and an even smaller proportion has been brought into production. In spite of this, Mexico is a significant producer of several minerals: it is the world's largest producer of silver, fluorspar and graphite, and is among the largest five producers. of lead, zinc, mercury, sulphur, barite, bismuth, arsenic and antimony. In total, 50 different minerals are mined com- mercially and there are about 15,000 mines in operation in Mexico at the present time. About 48% of Mexico's production is exported, generating about $510 mil- l ion in foreign exchange in 1978. The project is expected to help create about 14,000 to 16,000 new jobs in the mining sector. It will also support the government's regional diversification efforts. Finally, it is expected to reinforce the three agencies concerned--the Mining Development Commission, the Mineral Resources Council, and the Mexican Trust Fund for Non-Metallic Minerals. The $40 mi 11 ion loan to Nacional Financiera, S.A. (NAFINSA), has • the guarantee of the United Mexican States. It has a term of 17 years, in- cluding four years of grace, with interest at 8.25% annually. NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) T ECH N I CA L DA T A PROJECT: COUNTRY: TOTAL COST: Small- and Medium-Scale Mining Development Mexico $107 mi 11 ion • BANK FINANCING: $40 mill ion for a term of 17 years, including 4 years of grace, with interest at 8.25% annually OTHER FINANCING: Government of Mexico, $67 million IMPLEMENTING ORGANIZATION: Comiti de Coordinaci6n Secretar1a de Patrimonio Nacional y Fomento Industrial San Luis Potosi, 211, ler piso Mexico 7, D.F., Mexico. PROJECT DESCRIPTION: It includes: A. Credit and !guipment Leasing: (a) finan- cing of fixed assets, including machinery and equipment, to smal 1- and medium-scale enterorises mining metallic minerals through the Mining Develop- ment Commission (CFM), and non-meta11 ic minerals through the Mexican Trust Fund for Non- Metallic Minerals (FM); (b) permanent working capital loans associated with mine prepara- tion, mineral extraction, and mineral concentration/beneficiation projects to be financed with government resources; and (c) loans to small and medium-scale enterprises through. CFM for ore reserve development on both a risk-sharing and secured basis. B. Regiona_~ Beneficiation Plants: About ten reg1onal beneficiation plants, six or seven to be opera- ted by CFM and three by FM, to process minerals produced by numerous small- and medium- scale mining enterprises. C. Technical assistance to mining enterprises. PROCUREMENT: Procurement procedures for. goods and services financed under the credit component of the loan will be the customary ones for industrial credit operations. In the case of other goods and civil works purchased by the executing agencies in packages of $1 million or more, international competitive bidding (ICB) according to Bank guidelines will be required. Packages of goods or civil \NOrks of $500,000 or more will also be purchased by ICB. Local suppliers of goods will be entitled to a margin of preference·of 15% of the· c.i.f .. price·, or the ap- plicable import duties and taxes, whid1ever is lower. Package· ·~stimated to cost less than these 1 imits will be procured on the basis of the government's procedures, which have been reviewed by the Bank and are satisfactory. ESTIMATED COMPLETION DATE: 1984 - 0 - •