LatAm Materials: Notes From the Road: Steel, Copper and Mexico in Focus

Research evidence excerpt

LatAm Materials: Notes From the Road: Steel, Copper and Mexico in Focus

Goldman Sachs LatAm Materials

Feedback from Corporate Meetings

Grupo Mexico (Buy; MXN$228/share)

n Copper pipeline remains the core equity story: Management is highly constructive

on long-term copper demand, with a robust project pipeline supporting multi-year

growth across Mexico and Argentina. In Argentina, the investment climate is turning

increasingly favorable (e.g., via the RIGI framework), which could help unlock

large-scale, long-term projects.

n Ray expansion (ASARCO) is the key medium-term catalyst: The US$1.8bn Ray

project saw its economics materially improved due to higher copper prices, and now

the company believes it could move ahead in 2–5 years, adding ~90kt of production

with improved recoveries and lower unit costs. IRR is expected at minimum of

double-digits (higher thresholds given Mexican peso exposure), but power

availability and increasing energy costs could become an issue.

n Silver Bell expansion is a needed replacement, while El Arco remains long-dated:

The US$1.9bn Silver Bell project is required by 2031 to replace depleting deposits,

although board approval would only come once all permits and execution pieces are

secured. Conversely, the infrastructure-heavy El Arco project remains a nation-scale

infrastructure challenge (requiring port, transmission grid, and water solutions)

rather than a near-term mining asset.

n Domestic regulatory tone appears to be improving; USMCA negotiations also in

focus: According to management, the domestic tone appears cautiously more

constructive, with authorities showing greater willingness to engage pragmatically to

attract investment (link), and Pemex leadership changes highlighting the potential

for private sector participation.