Ganfeng Lithium’s Concessions Still in Dispute

Ganfeng Lithium has been accused of non-compliance with Mexican law by Alfonso Durazo Montaño, Governor, Sonora. Experts warn that the resolution of Ganfeng's conflict with the government will determine whether Mexico becomes a lithium producer in 18 months or 20 years. Durazo pointed out that Ganfeng has important lithium concessions in Bacadehuachi, Sonora. However, these have been withdrawn since the company did not meet the necessary investment requirements. "On the one hand, the project was impacted by the nationalization of lithium and, on the other hand, the non-compliance of investments. This forced us to withdraw the concession."

Durazo emphasized that the Ministry of Economy has taken care of the matter legally. However, Ganfeng has filed legal appeals to resolve the matter, arguing there is evidence that its investment significantly exceeds what is considered minimum under Mexican law, reported MBN. Ganfeng explained that, if an agreement is reached with the court, the project could be developed in 18 months. However, if done with the government, given its financial and technological limitations, it could take 20 years to reach lithium production.

Peter Secker, CEO, Bacanora, subsidiary of Ganfeng Lithium, stressed that if the matter is not resolved through the courts or through the creation of a new partnership, the project could end up being sold. "No one is going to invest a billion dollars unless they have some kind of security. People will prefer, for these larger projects, to go to lower risk jurisdictions," Secker said.

Durazo stressed that while lithium production in Mexico has been delayed by the issue with Ganfeng, it should also be noted that most of Mexico's lithium reserves are in clay deposits that are expensive and difficult to access. 

“Mexico's only possible lithium source to go into production is a clay type. No country in the world has produced any lithium from such rocks. The company investing in Sonora has published technical reports that lithium can be separated from clay and converted into lithium carbonate. The development of the mine and construction of a chemical plant will require over US$400 million in investment,” Armando Alatorre, President of Mexico’s College of Mining Engineers, Metallurgists and Geologists, told MBN.

Durazo emphasized that CONACYT is in the final stages of creating its own process to extract lithium from clays. In July 2023, President López Obrador commented that CONACYT was 95% advanced in this new lithium technology. However, no further comments have been made. Currently, lithium production is not expected until 2028, according to Pablo Taddei, CEO, LitioMX.

Mexico has 36 lithium projects under control by 10 foreign companies, including Organimax Nutient, Bacanora Lithium, One World Lithium, Radius Gold, Infinite Lithium, Rock Tech Lithium, Alien Metals, Zenith Minerals, Lithium Mex, Pan American Lithium and ZEOX. Of these companies, only three have advanced their projects from greenfield stages: Bacanora, Organimax and One World Lithium, according to an Expansión report. The 36 projects cover 97,000ha. However, there are other projects that were previously under review, covering 537,000ha, equivalent to 84 percent of the concessions associated with lithium. These new projects are expected to become paralyzed due to the Mining Law reform, however.