LATIN AMERICAN SPECIAL — Mexico a world supplier of silver

Silver in Mexico, since pre-Hispanic times, has been considered a precious metal. The quality and abundance of Mexican silver has brought many a fortune to ambitious souls and has supported Mexico through thick and thin.

During colonial times, silver was one of the donning graces of New Spain. Mexico was fundamental to the Spanish Crown; its silver supported the expenses and whims of the “conqueror.” Silver and the other mining and metallurgical riches found in the depths of this fertile land have attracted adventurers worldwide through the centuries.

The history of silver mining in Mexico is long; it is a play of many acts with an assortment of characters. Upon arrival in 1519 to the land of the Aztec and Maya civilizations, the Spaniards marveled at the wealth of precious metals and the craftsmanship of the indigenous peoples. The natives of Mexico had mined not only gold and silver for many years, but also copper, lead and tin.

Once the Spanish colony of New Spain had been established, a principal goal was the exploitation of gold and silver in the hills to finance Spain’s economy. Silver was a key export for the colony and has remained important ever since. Production under the Spaniards was impressive; Mexican silver represented 57% of worldwide production in the 18th century. However, silver mining during the colonial period was stained by the exploitation of local manpower — the indigenous peoples of the area — and an inefficiency and waste of natural resources.

Nevertheless, in regions such as Pachuca, Zacatecas, Guanajuato, San Luis Potosi, Taxco and around the Sierra Madre mountain range, the colony managed to mine in 1804 about 27 million pesos worth of silver from an estimated 3,000 mines, representing 66% of the world’s silver production. Of these riches, mine operators had to yield a one-fifth proportion to the Crown. Aside from this substantial payment, Spain mandated the use of only Spanish mercury in Mexican silver-mining processes, although mercury could be mined in Mexico and the process of using mercury was invented in Mexico. Likewise, Spain kept a strong grip on the colony by controlling the export of Spanish mercury and blasting powder as well as charging assorted fees for refining, minting and the like.

Mining methods in Mexico received a new influx of technology with the arrival of other foreigners, primarily the British, after the War of Independence (1810-1821). England’s Cornwall, long known to be in the forefront of mining techniques, technology and skilled workers, played a fundamental role in the advancement of Mexico’s silver mining.

The war had taken its toll on Mexico’s mines. After years of abandonment, the neglected shafts and pits were filled with water and greenage, seemingly destroyed.

In 1823, the Mexican government of the new nation was in desperate need of income. Mining was seen as a sure way to generate funds, but an immense amount of capital was needed to restore the mines and re-establish production. Thus, the government relaxed restrictions on foreign participation in mining. The ingenuity and persistence of the British miners who came to Mexico transformed the depressed state of the mines. With the capital of these foreigners and the hard work of the Mexican miners, as well as the latest technology, silver production finally went far beyond that of the Spaniards.

Between 1820 and 1830, 10 foreign mining companies were established in Mexico; seven of these were British. Britain, at the moment, was the financial capital of the world and had a strong tradition in the industry. Rehabilitation was achieved, but because of inflation, hard economic times in Britain and poor management, British mining attempts failed. Production was never able to cover the investment or costs of operation and maintenance. In addition, the value of silver fluctuated greatly; in 1873, a fall in world prices marked the final blow to many mining companies.

In the early 1890s, however, a brighter future shone on the mining industry. An important factor was the advent of technology that used hydroelectric and hydraulic energy, instead of coal. Production costs fell markedly; meanwhile, the demand for gold and silver had increased again. Foreign investment was courted through further reduced restrictions.

Mexico may have been improving and taking advantage of its mining industry, but it was ignoring latent problems and sources of friction. By completely opening the mining industry to “progress” and foreign investment, as was done with many other industries under Mexican president Porfirio Diaz (1876-1910), Mexico was not using progress to its advantage. Although infrastructure and industry advanced, the benefits were in reality leaving the country with every export of precious metals. Likewise, the Mexican workforce had yet to feel the “benefits” of any progress.

These problems exploded in 1910, ushering in a decade of civil strife exactly a century after Mexico declared its independence from Spain. The Mexican Revolution took its toll on the mining industry, but nothing compared to the War of Independence. Once stability returned to the country in the 1920s, a new importance was put on Mexico’s mining; Mexican capital was sought and given preference. Also, mining was no longer strictly for export. Production was focused on internal, as well as external, supply and demand. Recently, Mexico’s production of gold and silver has declined as the mining industry has diversified. Mexico remains the leading producer of silver — 20% of worldwide production. In 1992, Mexico’s total volume production was 2.3 million kg (nearly 81 million oz.) of silver. The U.S. is the main export market for Mexico’s minerals and metals, receiving around 60% of Mexico’s silver exports during the last five years.

Nevertheless, Japan and Europe have become substantial markets, purchasing roughly 27% and 8%, respectively, during the last five yeas. The remainder of Mexico’s silver stays in the county and is used mainly for artwork and industry, as well as for the minting of money.

— This article, from a recent issue of the magazine “Business Mexico,” was written by Katherine Barnhart, assistant editor.