ETF Trends
ETF Trends

Higher metals prices have prompted greater interest in mining operations, and the Mexico exchange traded fund (ETF) could benefit from the influx of cash in merger and acquisitions in Mexico’s mining sector.

Mexico’s Mining Chamber stated that around 50 sites are potential targets for M&A, worth a combined $4.4 billion in mining investments as metals prices continue their upward trajectory, reports Mica Rosenberg for The Daily Crux.

Sergio Almazan, the head of the chamber, believes that investments will increase 7.3% in 2011 year-over-year.

  • The large Cananea copper mine, owned by Grupo Mexico, is finally in operation after a three-year-long halt. As a result, Mexico’s copper production is projected to surge 31% this year to 350,000 tons, says Almazan.
  • Additionally, Mexico’s silver production may increase to 138 million ounces this year from 128.6 million ounces in 2010. You can get exposure to Mexico’s silver miners via Global X Silver Miners (NYSEArca: SIL), of which they account for nearly 12%.
  • Gold production is estimated to rise 12.5% to around 2.7 million ounces this year, as well.

Eduardo Luna, the director of precious metals miner Primero, comments that Mexico is a primed for acquisitions, with 738 exploratory projects under way in Mexico. “There are around 50 projects that are being studied by different companies that have the possibility to be developed beyond the capacity of their actual owners. Definitely there will be mergers and acquisitions,” Luna remarked.

For more information on Mexico, visit our Mexico category.

  • iShares MSCI Mexico (NYSEArca: EWW) has potential to move on this activity; materials make up 15%, while industrials are 12%. Grupo Mexico is 7.6% of EWW and is the largest mining component.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.