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Mexico approves nationalization of lithium industry

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Posted: Tuesday, April 26, 2022. 12:42 pm CST.

By Aaron Humes: Mining.com reports that the Mexican Senate has approved the creation of lithium as a “strategic mineral,” effectively nationalizing the nascent industry and giving the state control and rights as proposed by President Andrés Manuel López Obrador.

Mexico assumes control over the exploration, exploitation, and use of lithium as the exclusive right of the state. It also includes a clause allowing the state to take charge of “other minerals declared strategic” by Mexico.

A new decentralized body will be established in 90 days to deal with lithium-related matters, particularly existing contracts including the Bacanora Lithium Company in the country’s northwest. The company, owned by China’s Genfeng Lithium, owns the giant Sonora project, which is slated to produce 35,000 tonnes of metal per year starting in 2023.

Lopez Obrador has fought to reverse resource reforms under previous governments, which opened up the oil and electricity sectors to private investment. He has pushed a resource exploitation model that gives priority to state-controlled companies.

But some suggest the new law would bring trade tensions with the United States and Canada due to the United States-Mexico-Canada Agreement (USMCA) which did not contemplate such a move.

The Mexican Association of Mining Engineers, Metallurgists, and Geologists said in a statement that “clays containing lithium have been located” in the country. “To the best of our knowledge, no country has produced and commercialized lithium from clays,” it added.

Most of the world’s current lithium output is locked away in long-term deals as downstream chemicals producers, battery makers and electric vehicles makers are frantically trying to secure future supply.

Mexico’s reserves of the sought-after metal positions it among the world’s top 10 producers, data from the U.S. Geological Survey shows.

 

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