The Current State of Lithium Production in Mexico

Martín Pérez, CEO of Orocobre said in an interview with 30 Denarios that they are expecting lithium prices to go up as the demand recovers from the COVID-19 pandemic, one that affected the lithium miner’s profit. Pérez also mentioned how in 2019 and 2020, the demand of electric cars has increased and therefore, helped the lithium market recover from its losses. He also said  the lithium market would most likely tighten for the second half of the year, as Chinese supply remains restricted by weather conditions and limited feedstock.

Elon Musk, Tesla´s CEO mentioned in a recent tweet, that nickel was their biggest concern for scaling lithium-ion cell production. They are looking to shift their standard range cars from nickel to iron cathode – which there is plenty of, as well as lithium. Nickel is scarce and expensive. According to BloombergNEF Musk has pleaded with miners to produce more nickel. The supply will be tight for the next three years and there could be a significant deficit as early as 2023.

In México, the Sonora Lithium project is the first massive lithium extraction project in the country and it is set to begin operations in 2023, as previously reported by MBN. The project will be supervised by Bacanora Lithium, which owns 77.5 percent of the project, while the remaining 22.5 percent belongs to their Chinese partner Ganfeng Lithium. The US$420 million project covers a massive 100,000 hectares in the northeast corner of Sonora. The estimated production of lithium is set to be at around 17,500 tons.

While the Sonora Lithium super project is set to be groundbreaking for México, some of the industry leaders have considered that President López Obrador has failed to support mining in México. The main concern voiced by mining companies include the freezing of new concessions and the hostile attitude the Federal government has had towards the industry, reported by BNamericas. In addition, Morena has introduced legislative motions that aim to nationalize the emerging lithium mining industry and restructure the rights of concessions, which could lead to lithium prices skyrocketing.

The goal of this motion introduced by Morena´s senator Alejandro Armenta, is to guarantee that Mexico cashes in on the most amounts of profit from its natural resources. Which as previously mentioned, will begin in 2023 with the Sonora Lithium Project. Armenta argues the profits from the lithium extraction, are four times greater than the national debt, which has been considered by BNamerica to be unrealistic. A counterargument to this proposal is the lack of lithium projects. While there have been 57 locations where lithium has been detected, the possibility of developing lithium extraction operations is low, due to the yield these locations may have is considered too low. In addition, some of these locations are located in difficult terrains where 22 of them are hard rock, and 11 sedimentary.