Exploration Essential to Maintain Investments

Q: What were the most important steps your unit took in 2021?

A: One of the most important endeavors our unit was responsible for in 2021 was the continuation of lithium exploration efforts. We established a database of Mexico’s lithium reservoirs, which led us to establish an open channel of communication with Mexico’s governmental authorities regarding the amount and diversity of the country’s lithium reservoirs, located mostly in Mexico’s northwestern states. We also clarified the legal status of these reservoirs by defining which parts were already controlled by existing concessions. In addition, we worked with legislators to define which minerals could be considered strategic for the energy transition process and for the production of clean energies. The criteria that determines whether or not a mineral is “strategic” has not been defined. The nature of this classification is quite delicate, given the vast implications that it could have on the mining industry.

Q: How do Mexico’s lithium reserves compare to those of other countries?

A: Lithium can be found in three different types of deposits: brines, pegmatites and in certain sedimentary rocks, which in Mexico’s case are mostly hectorite clays. Brine deposits are quite rare in Mexico but very common in South America, and they represent a category of their own regarding extraction because much of the work is done by mother nature, so the investment needed is very low. To extract lithium from hectorite clay, a large number of additional processing steps need to be added to the industrial procedure through which the mineral is extracted. This means more money and energy. For instance, you might obtain three grams of lithium from each kilogram of hectorite clay. Therefore, it might not be economically viable to extract many of Mexico’s lithium reserves at this time since more direct exploration and more technology might be required. The reservoirs that we and the SGM (Mexican Geological Service) are working on do not include those already in private concessions — those that are located within indigenous lands and those located within protected natural areas. This has left us with close to 83 outcroppings that have been intensely explored. This information will be used as a basis to determine which specific locations merit more in-depth exploration.

Q: How has Mexico's position as a destination for mining investment changed in the last year?

A: We promote investment by providing the legal certainty for investors to facilitate their business in Mexico. This is part of the Ministry of Economy’s broader mission of creating and sustaining legal conditions to promote investment and assure investors that legislative initiatives will not result in concession cancellations or major and retroactive changes in the environmental regulations that govern the industry. We work with SEMARNAT to promote environmental protections and protect the rights of indigenous communities. Mining projects involve long and complicated processes that begin with the granting of concessions. We want people to understand this concept. The viability of a mining project involves a number of important exploration tasks that come after the concession is granted, so investments made in this sense already come with a substantial degree of risk.

 Q: How can modifications in the industry’s fiscal and labor conditions impact its attractiveness as a destination for investment?

A: The main focus of these changes should be to detonate the amount and depth of exploration activities taking place. CAMIMEX has reported that exploration investments have decreased by close to 60 percent. We want Mexico’s fiscal policy to create incentives that promote exploration. Mining projects that do not include exhaustive mining campaigns place their future continuity at risk. This occurs by not giving mining companies the conditions they need to execute those campaigns. As a result, we risk the continuity of their presence and investments in the country. Mexico can become a more attractive destination for mining investments by establishing a clear understanding with investors regarding the nature of their exploration work and the opportunities each mine provides.    

 Q: What were the most important steps your unit took in 2021?

A: One of the most important endeavors our unit was responsible for in 2021 was the continuation of lithium exploration efforts. We established a database of Mexico’s lithium reservoirs, which led us to establish an open channel of communication with Mexico’s governmental authorities regarding the amount and diversity of the country’s lithium reservoirs, located mostly in Mexico’s northwestern states. We also clarified the legal status of these reservoirs by defining which parts were already controlled by existing concessions. In addition, we worked with legislators to define which minerals could be considered strategic for the energy transition process and for the production of clean energies. The criteria that determines whether or not a mineral is “strategic” has not been defined. The nature of this classification is quite delicate, given the vast implications that it could have on the mining industry.

 Q: How do Mexico’s lithium reserves compare to those of other countries?

A: Lithium can be found in three different types of deposits: brines, pegmatites and in certain sedimentary rocks, which in Mexico’s case are mostly hectorite clays. Brine deposits are quite rare in Mexico but very common in South America, and they represent a category of their own regarding extraction because much of the work is done by mother nature, so the investment needed is very low. To extract lithium from hectorite clay, a large number of additional processing steps need to be added to the industrial procedure through which the mineral is extracted. This means more money and energy. For instance, you might obtain three grams of lithium from each kilogram of hectorite clay. Therefore, it might not be economically viable to extract many of Mexico’s lithium reserves at this time since more direct exploration and more technology might be required. The reservoirs that we and the SGM (Mexican Geological Service) are working on do not include those already in private concessions — those that are located within indigenous lands and those located within protected natural areas. This has left us with close to 83 outcroppings that have been intensely explored. This information will be used as a basis to determine which specific locations merit more in-depth exploration.

 Q: How has Mexico's position as a destination for mining investment changed in the last year?

A: We promote investment by providing the legal certainty for investors to facilitate their business in Mexico. This is part of the Ministry of Economy’s broader mission of creating and sustaining legal conditions to promote investment and assure investors that legislative initiatives will not result in concession cancellations or major and retroactive changes in the environmental regulations that govern the industry. We work with SEMARNAT to promote environmental protections and protect the rights of indigenous communities. Mining projects involve long and complicated processes that begin with the granting of concessions. We want people to understand this concept. The viability of a mining project involves a number of important exploration tasks that come after the concession is granted, so investments made in this sense already come with a substantial degree of risk.

 Q: How can modifications in the industry’s fiscal and labor conditions impact its attractiveness as a destination for investment?

A: The main focus of these changes should be to detonate the amount and depth of exploration activities taking place. CAMIMEX has reported that exploration investments have decreased by close to 60 percent. We want Mexico’s fiscal policy to create incentives that promote exploration. Mining projects that do not include exhaustive mining campaigns place their future continuity at risk. This occurs by not giving mining companies the conditions they need to execute those campaigns. As a result, we risk the continuity of their presence and investments in the country. Mexico can become a more attractive destination for mining investments by establishing a clear understanding with investors regarding the nature of their exploration work and the opportunities each mine provides.    

 The Extractive Industries Unit at the Ministry of Economy coordinates all state mining activities, as well as actions to promote domestic and foreign investment in the sector. It was created by Presidential decree in April 2021 to replace the Undersecretariat of Mining.