Trump May Be Good News for Mexico, as Long as You’re a Miner

  • Miners with operations in Mexico set to benefit from weak peso
  • U.S. focus on domestic infrastructure could boost metal prices

President-elect Donald Trump’s plan to build a wall, both physical and metaphoric, between Mexico and the U.S. stands to benefit mining operations south of the border as the peso weakens, company executives said.

“A cheaper peso reduces our costs,” Randy Smallwood, chief executive officer of Vancouver-based Silver Wheaton Corp., said in a telephone interview Wednesday. “The Mexican mining companies don’t rely on having to deliver into the U.S. It’s a commodity that’s priced on a worldwide space and so any weakness makes them all that more competitive.”

Silver Wheaton provides mining companies with finance in exchange for future gold or silver production. Among its assets in Mexico are streams on Goldcorp Inc.’s Penasquito and Los Filos mines and on Primero Mining Corp.’s San Dimas mine. Smallwood said U.S. protectionism will clearly be negative for any Mexican companies selling manufactured goods directly into the U.S.

The peso tumbled to a record after Trump, who campaigned to renegotiate trade deals and build a wall along the border, surprised investors by winning the U.S. presidential election. At 4:59 p.m. in New York, it was down 7.6 percent to 19.82 per dollar. Analysts at Nomura and Capital Economics say it may fall to as low as 25 in the aftermath of Trump’s victory.

The Ups and Downs of Mexico’s Peso During U.S. Election: Chart

“Build the wall,” was one of the most provocative rallying cries in Trump’s broader plan to increase protectionism and restrict illegal immigration. His platform also included dismantling the North American Free Trade Agreement, and a focus on building a stronger America from within.

The latter goal includes spending more than $500 billion on infrastructure, which could provide a further boon to global mining companies. Industrial metal prices rallied on Wednesday, pushing up the share prices of producers.

“Lower pesos and higher metal prices obviously help us,” Keith Neumeyer, chief executive officer of First Majestic Silver Corp., said in an interview. “A Trump victory may do that, so it’s a win-win for Mexican operators.”

First Majestic Silver surged as much as 21 percent on Wednesday and was the best performer on the Toronto Stock Exchange. Silver Wheaton gained as much as 6.9 percent.

— With assistance by Isabella Cota

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