Gangfeng Lithium in Line to Invest in LitioMx

Alfonso Durazo, Governor, Sonora, shared that the Chinese company Gangfeng Lithium is open to invest in the state company LitioMx. Gangfeng is interested in investing in the exploration and exploitation of lithium in the state. 

Gangfeng Lithium recently acquired Bacanora Lithium, a company that holds the exploration concession for the Sonora Lithium project in the Bacadehuachi municipality in Sonora. Bacanora Lithium was acquired by Gangfeng Lithium less than one year ago. The electric battery manufacturer paid US$264 million for 100 percent of the shares of the company. 

Both companies expected to start production at the end of 2023. Sonora Lithium is Mexico’s main lithium prospect. According to Bacanora Lithium, the deposit has around 8.8 million tons of lithium carbonate. Additionally, Sonora has the biggest potential deposit globally with 244 million tons of minerals, 3.5-4.5 million of which correspond to lithium carbonate. In the current commodities market, one ton of lithium carbonate is sold above MX$1.5 million (US$75,015). Production at Bacanora is expected to be around 35,000 tons per year. If achieved, Mexico will reach the status of major international producer, according to Reuters.

A couple of weeks ago, the government published a decree on the Federal Official Gazette (DOF) through which it created LitioMx as a decentralized organism, completing the Mining Law reform started in April 2022. According to the decree’s Art. 6, LitioMx must elaborate programs for the exploration and exploitation of lithium, as well as develop projects involving engineering, research and geological studies. The company can also collaborate with both public and private players toward the transformation and distribution of lithium derivatives.

One of the most controversial articles of the decree was Art. 9, which specifies the structure of the company. According to the article, the Minister of Energy will head the Managing Board. The board will also be formed by the Ministers of Finance, Economy, the Interior and Environmental and Natural resources, all of them with a voice and voting rights.

Nevertheless, the Mexican government does not have sufficient public funds to develop the country’s lithium industry. Therefore, López Obrador declared the company will be open toward the participation of private investors. The president announced that LitioMx will be a public-private company, since developing the new industry requires heavy investment that the government cannot provide on its own.