This is the tangled story that brings the commitment to lithium undertaken by the so-called fourth transformation:
OneSaying that lithium is ours is unnecessary, although the intention to touch sensitive fibers is perfectly understood. In Constitutional Article 27 it is clear that all minerals found in the subsoil belong to the nation. Therefore, presuming the nationalization of lithium is fallacious. In the case of lithium, the way in which Mexico has led the exploitation of this mineral has been through concessions, in exchange for obtaining royalties for it.
Twolithium is a natural resource that can contribute to the energy transition, but in Mexico there is no clear picture of its scope.
Let’s review the context, which runs throughout this story, based on the panorama offered by the document called “Lithium in Mexico: truths and lies”, authored by Aleida Azamar, coordinator of the Master’s Degree in Sustainable Societies of the Metropolitan Autonomous University:
The largest lithium reserves are found in Australia and Latin America, and the concentration of production chains is centered on the Chinese market. Australia and Chile concentrate almost 80% of the world production of lithium salts, but it is in Latin America where the greatest productive potential of this metal is found. Bolivia, Argentina and Chile form the lithium triangle of Latin America.
However, the discovery of a mineral reserve in Mexico could change the form and strategies of all stakeholders interested in exploiting this resource. In 2019, the discovery of a lithium deposit in Sonora, Mexico came to light, which could be one of the largest in the world with supposedly 243 million tons of this resource concentrated in one place and whose potential could still be greater, since this type of veins tend to widen as their extraction deepens.
At this time there are several companies with permits for the exploitation of lithium in Mexico: Radius Gold, Infinite Lithium, Rock Tech Lithium, Alien Metals, Zenith Minerals, Litio Mex, Pan American Lithium Corp and Zeox; “These companies are not lifting a finger to explore and they only benefit from the stock market thanks to the price of the mineral,” says Aleida Azamar.
Additionally, there are Bacanora Lithium and Rockland Resources Ltd., which are investing; Also, there are two Canadian companies: Organimax Nutrient and One World Lithium.
According to the document by Aleida Azamar, the Mexican Geological Service indicates that, from 1979 to date, at least 57 locations with the presence of lithium have been discovered throughout the country, but most of them lack the capacity to develop due to their low productive concentrations. Today, there are only 11 deposits that present extractive viability in the future, but none is in the active exploitation phase.
However, the focus is basically on three sites that could be exploited: Salinas, San Luis Potosí; Villa de Cos, Zacatecas; Bacadehuachi, Sonora. The latter is the one that arouses the most interest, but so far the size of the reserve cannot be determined exactly.
Anyway, it is in Sonora where this story can break down and here comes the third element to consider: the risks of expropriation.
Before the adjustments to the Mining Law, the voices to expropriate the Bacadéhuachi mega-deposit were already being heard. At the time, Víctor Toledo, then head of Semarnat, suggested that the country’s lithium mines be nationalized. Later, Alfonso Durazo Chávez, son of the governor of Sonora, joined. Recently, the President of the Republic announced that the terms of the concession that was once granted to a company in Sonora will be reviewed.
Will we be facing an expropriation? Bacanora Lithium could be the victim. The company, at first, was a company with investments from the United Kingdom and China, but the British decided to opt out of their participation, mentioning that they lack the means and capacities to carry out a satisfactory extraction process. Now, the Chinese mining company Ganfeng Lithium (one of the largest in the world) operates Bacanora Lithium, which to date has invested more than 420 million dollars in lithium extractive projects.
Here is the reason that could give way to the lawsuit: Bacanora Lithium estimates that, by 2023, the lithium exploitation process will start with almost 35,000 tons per year, which could make Mexico one of the most relevant players in the world in terms of the production of this resource, cites the document of the also president of the Mesoamerican and Caribbean Society of Ecological Economy. Having said the above, yes, there are political criteria behind all this, but also a lot of money at stake.
What can come? No section of the Mining Law mentions the end of the concessions that have already been granted. “The law says that they are not going to end and, since the changes are legal and not constitutional, no one could, not even the president, revoke a concession,” says Daniel Salomón, an expert on energy issues. “It is not possible to retroactively apply a new law to a company that already had acquired rights.”