Energy Reform Could Scare Away Investment: CAMEXLI
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Energy Reform Could Scare Away Investment: CAMEXLI

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Paloma Duran By Paloma Duran | Journalist and Industry Analyst - Mon, 04/18/2022 - 07:52

The Mexican Chamber of Lithium (CAMEXLI), consisting of companies that market, refine and manufacture lithium products and are key to the creation of a state-owned lithium company, warned that the energy reform could scare away the investment needed to boost the lithium industry.

CAMEXLI announced that it has ambitious plans to manufacture and recycle lithium, as well as to develop electric vehicles (EVs) in Mexico. The chamber announced an investment of MX$20 million (US$1.01 million) to build two lithium battery recycling plants in Hidalgo and Guanajuato. In addition, the government aims to construct seven micro-factories to recycle lithium batteries. CAMEXLI explained that the projects would enable Mexico to compete with foreign companies seeking to enter the local lithium supply chain.

Nevertheless, Marco Sánchez, President, CAMEXLI, warned that these plans will become obsolete if the country does not receive foreign investment to acquire first-class technology and experts to help create a strong lithium industry.

"We do not want the electricity reform to send the wrong message: that there will be no possibility for private companies to invest in lithium exploration and extraction. It would halt the development of the industry," Sánchez said.

In addition to CAMEXLI, COPARMEX has also emphasized the need for the participation of private companies in the development of the lithium industry, especially since they have more technology, experience and knowledge regarding mining. “The government does not have the infrastructure, so it is very likely that it will hire private companies to exploit the lithium. In the end, the state will have to turn to them, whether Mexican or foreign, to make the most of the industry,” Carlos Aurelio Hernández, Vice President of Renewable Energy of the National Energy Commission, COPARMEX, told El Heraldo de Mexico.

Kurt Gerhard López Portillo, President, COPARMEX Sonora Norte, said that the most prosperous countries are those where the government is dedicated to governing efficiently, while industries do business. Likewise, he stressed that monopolizing a resource that is still new and that lacks certainty regarding its long-term profitability can be counterproductive.

Currently, specialists are skeptical about the approval of the energy reform, especially since the strongest opposition parties have said they will vote against it. In addition, the ‘Go for Mexico’ coalition has also announced a counterproposal to López Obrador’s energy reform. Consisting of 12 key points, the proposal addresses the issue of lithium, which stands out since the resource would not be nationalized.

The opposition leaders said that under the new proposal, lithium could be produced by the private sector. The resource should still be considered the state’s property, but its exploitation should follow the same rules as oil production does since the 2014 Energy Reform. This entails exploration and production rounds, in which the state will keep part of the earnings.

Photo by:   Kumpan Electric

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