Extraction of Lithium, the ‘New Oil,’ Faces Political StormBy Pablo Méndez | Tue, 10/19/2021 - 15:11
In recent years, lithium has become as one of the most important and valuable minerals in the mining industry, as it is the main component for the production and manufacturing of rechargeable phones, computers, digital cameras, and electric vehicle batteries, as well as for the elaboration of ceramics, glass, and medicine. Due to its importance, several countries with large deposits of this mineral have prioritized its extraction, proving that lithium has become a trending theme within the mining industry.
The importance of the extraction of lithium is most clearly evident when it comes to mass production of batteries, since its chemical components are ideal for proper battery production. According to experts, lithium will soon be viewed as “the new oil,” since it is considered as a fundamental component for the ongoing energy transition, which aims to leave behind the energies generated through fossil fuel in favor of those natural resources that have a lower ecological impact. Although lithium is a nonrenewable resource, it is a rechargeable material, so it can be used several times for different purposes.
Unlike other minerals, lithium can be found in two different kinds of deposits: vein reservoirs and natural brines. The first is the most common in the extractive industry as it only involves obtaining the mineral through the extraction of soil, while the second occurs in natural salty lakes, from which lithium is extracted through an evaporation process, making its extraction simpler and profitable.
Mexico, as one of the richest countries in minerals around the world, also has large lithium deposits in its territory; however, these deposits have a very specific condition that makes them different from other deposits around the world, thus complicating its extraction method. Mexican lithium deposits are encapsulated in clay, which prevents lithium from being extracted through simple drilling processes. Instead, a very complicated and expensive process is required. Unfortunately, Mexico lacks the necessary technology to conduct this method, so as of today, its extraction is considered impossible and, therefore, there are no active lithium exploitation projects in the country because it is a business without economical profitability.
In recent months, lithium has been the subject of several political controversies arising from the statements and actions of the current federal government, which has focused its political agenda on the eventual nationalization of this ore. On Sept. 30, 2021, President Andrés Manuel López Obrador submitted a constitutional amendment initiative to give control of the production, distribution, and administration of electricity to the federal government. Although this reform, at first, appears to affect only the electricity industry, the truth is that it is the “disguised” nationalization of lithium, as well as other radioactive and strategic minerals related to the country's energy transformation. This constitutional amendment has caused concern, instability, and uncertainty among all foreign investments focused on the exploitation of the ore, and if it is approved, the only one entitled to explore, exploit, and benefit from this mineral would be the Mexican government.
Certainly, the nationalization of lithium represents a threat to the national economy beyond a benefit to Mexican society, since it may create widespread mistrust among foreign investors; cause job losses as a result of the closure of enterprises dedicated to lithium extraction; and lead to a lack of economic support to those communities where the lithium exploration projects are developed.
Conversely, as mentioned, lithium located at Mexican deposits must be extracted through highly specialized processes, which are also complicated and innovative, and imply the need of new technologies that allow its extraction. As of today, Mexico lacks the appropriate technology to conduct its extraction, which creates an environment of uncertainty for the current administration as well as the private sector, leading all of us to infer that the Mexican government lacks any kind of experience, infrastructure, or the necessary resources to perform lithium exploitation. Its nationalization would mean that Mexican lithium can neither be exploited nor used, and consequently, Mexico will not be able to stand out as one of the world’s principal lithium extractors.
It is very clear that, today, lithium is one of the world’s most important minerals since it represents an essential element in the production of materials and resources that provide us with most of the goods and needs that are indispensable in our lives; also, it represents a crucial element for the development of renewable energy. In view of all these circumstances, the federal government should focus its actions on allowing the lithium exploitation in Mexico to create diverse opportunities for economic growth, and not focus on nationalizing a mineral that, ultimately, cannot be exploited nor used by the Mexican government itself. It is time for the Mexican government to trust in local and foreign private investments and look forward to the economic growth of our country.