Government Does Not Seek to Nationalize Lithium Production

MORENA, President López Obrador´s political party, has announced it does no longer seek to nationalize lithium production in Mexico and is calling on the private sector and investors to help the government boost the country’s lithium potential.

In February, MORENA announced its intentions to introduce to the Senate an initiative that would nationalize the country's lithium production. The spirit behind MORENA’s initiative to nationalize lithium was to strengthen Mexico’s sovereignty and consolidate its position  in the international arena. A month after the initiative's announcement, López Obrador said the government was planning to have a greater stake in lithium production, because other companies are not using mining concessions correctly.

In May, President López Obrador announced the development of a new framework and policy inspired by Bolivia's lithium industry experience. Mexican government officials have discussed with their Bolivian counterparts the possibility of receiving a diagnosis and proposals in regards to Mexico´s role for the extraction of lithium. However, Bolivia has failed to boost its own lithium production, which has raised many questions if the Bolivian experience was the best option for Mexico's lithium.

MORENA’s Senator Alejandro Armenta Mier, told Reuters that instead of nationalizing the new resource, he will promote a bill to regulate the lithium market in Mexico. The bill will be presented in September with the new legislative session. In addition, Armenta explained that the government has understood that to take advantage of lithium, Mexico needs the private sector. ”We are allies of domestic investors and foreign investors who respect us."

MORENA has shifted its position towards private investment in lithium. Minister of Economy Tatiana Clouthier said the government was considering a public-private partnership to develop the lithium industry in Mexico. Clouthier suggested that the government should have a 51 percent stake, while the rest would be taken by private companies and investors.

Mexico has a large number of potential reserves of lithium, a resource that is used mainly in electric vehicle (EV) batteries. The country's industrial matrix is world-class, making it the fifth largest auto parts producer in the world. Although EV production in the country is still in its early stages, industry trends are clearly leaving the internal combustion engine behind and Mexican factories are expected to soon begin assembling EVs in massive numbers.

Mexico would therefore profit from investments directed not only at the first stage of the lithium-ion battery value chain — the extraction of raw materials — but also at the subsequent phases: synthesis of active battery cell materials, manufacturing of electrodes and cells and recycling.

However, there is a problem with the country's lithium reserves. Most of the resource is found in hard-to-extract clay deposits, which are very expensive and difficult to extract. Fernando Alanis, President of CAMIMEX, has said that Mexico's lithium potential is not as great as it appears. “Unfortunately, lithium in Mexico has a concentration of only 0.001 percent per ton and, to bring it to a percentage of 30 percent, which is what is needed for a battery, the amount of energy is very high and unaffordable. We are far from being a top producer of lithium," said Alanis to La Jornada.

Despite these factors, the world is watching Mexico and its lithium potential. The Sonora Lithium project is the main lithium project in Mexico and is scheduled to begin operations in 2023. The project will be supervised by Bacanora Lithium and Ganfeng Lithium, who recently announced their intentions to acquire 100 percent of Bacanora's shares. The production of the US$420 million project is expected to be around 35,000 tons per year. If achieved, Mexico will have the status of a major international producer, said Reuters.