Tourists often behave like jittery sparrows, especially when they travel to foreign destinations. They tend to congregate in the same places (beaches, resorts, famous cities) and they scatter at the first sign of trouble - something Mexico is learning the hard way.
The number of visitors to that country has dropped by some four million this year due in part to a war between competing drug cartels that has left some 2,500 people dead, mainly in northern states such as Sinaloa, Sonora and Chihuahua.
In the southwestern state of Oaxaca, a teachers' strike that began last summer has morphed into a general protest aimed at forcing the resignation of Gov. Ulises Ruiz. The schools did not open in September. Big chunks of the capital city, also named Oaxaca, have been shut down. Clashes between dissidents and federal police have left 15 dead, including a freelance U.S. journalist. Soldiers with automatic weapons are patrolling the beaches and the turmoil is scaring the tourists away.
But despite such problems, Mexico is a fascinating blend of right-up-to-date and way-behind, which I discovered during a recent 10-day business trip. Civic officials in many cities are crazy about speed bumps and have installed them everywhere to slow down otherwise half-mad drivers in Hummers, Escalades, Navigators and sleek, late-model sedans.
Street vendors, ranging from seven-year-old kids to 70-year-old men, hang around intersections and when a light turns red they wander among the vehicles hawking newspapers or assorted trinkets and baubles.
Mexico City, the national capital, is a virtual city state of some 20 million people and extends about 50 miles from end to end. There are so many drivers on the roads that freeway traffic is a daily nightmare. My centrally located hotel was a 20-minute drive from the airport at 6 a.m. During the evening rush, the same trip took two hours.
But even as tourists head for the exits, mining companies are arriving in droves and Canadian-based enterprises are leading the charge. Currently, there are 228 foreign firms exploring for minerals or operating mines and 171 are from Canada.
The Aztecs and other aboriginal people were extracting silver and gold from mountainous deposits when the Spanish arrived in 1512 and mining has occurred non-stop in the five centuries since then. Mexico is the world's leading silver producer, it is fifth in lead, zinc and molybdenum, and 11th in copper.
Yet, the country's mineral potential remains under-developed in large part because until 1993 a restrictive law prevented foreign companies from owning more than 49 per cent of mining properties. That changed after Mexico joined NAFTA. The government of the day reformed its investment law and some big outside companies began acquiring assets. But most shut down their operations and pulled out when commodity prices started tumbling in the late 1990s.
For the past several years, many base and precious metals have been trading at record levels. Exploration money, a lot of it raised in Toronto and Vancouver, has begun to flow again and the miners are back. For them, Mexico is a new frontier, relatively unexplored or mined by contemporary techniques, and full of potential.
Most of the companies are operating in the northern states of Sonora, Sinaloa, Chihuahua and Durango. The north is the most prosperous part of the country and its residents tend to be more open to foreign investment, free trade and liberal economic policies. By comparison, the south is poorer, it is the source of most of the country's political turmoil, and the people there are prone to being wary and resentful.
Mining is always a precarious and unpredictable business, but Canadian companies got a break when Mexican voters went to the polls July 2 to elect a new president. They chose by a very narrow margin the conservative, pro-business candidate, Felipe Calderon Hinajosa of National Action Party over the left-leaning Andres Manuel Lopez Obrador of the Democratic Revolutionary Party (PRD).
Lopez Obrador dismissed the outcome and his supporters shut down Mexico City's business district for six weeks this fall in protest. He also staged his own inauguration on Nov. 20, Revolution Day, which is the national holiday.
The defeated candidate proclaimed himself the legitimate president and introduced a parallel government before an estimated 100,000 supporters at a rally in the capital.
Lopez Obrador also promised to disrupt Calderon Hinajosa's inauguration on Dec. 1. That didn't happen and the new man took office, which ensures that Mexico will remain open for business for the next six years at least.
Canadian mining investments should be secure and the miners themselves will be staying put. But it's anybody's guess when the jittery tourists will return.
(D'Arcy Jenish can be reached at jenish@businessedge.ca)
