Industry Leaders Worried Other Minerals May Be Affected by Reform

The proposed electric reform has industry leaders worried other officially yet-to-be-named “strategic minerals” may also be included in its draft, plunging the country back to its nationalistic roots.

The much-discussed and controversial electric reform sent to congress by President López Obrador contemplates not only, as MBN reports, a strengthened CFE by way of bestowing it 56 percent of the market as well control over lithium, but it also contemplates granting the government exclusive control over other “strategic minerals”, most unnamed but one that includes copper, “the heavyweight of Mexico’s metals sector,” which has industry leaders worried about the real beating heart of the reform.

Critics, including legislators in the Mexico´s Congress, say that “the president's draft plan will chill investor appetite for Mexican mining, as well as risk a fresh trade dispute with both Washington and Ottawa.” The proposed reform, to be passed by a two thirds majority as required by the Constitution and which still could get amended, instructs the government to withhold any and all lithium concessions, alongside other “strategic” minerals, although no specific minerals were named nor alternatives to concessions. According to a Citi Research note, the reform would make production of lithium in Mexico “increasingly unlikely.”

Alejandro Armenta, Senator for the state of Puebla from the ruling party MORENA, who, it was reported, was tasked with “shepherding” support for the reform in the senate, said that the list of strategic minerals includes copper, as well as cobalt and nickel, though these aren’t yet produced in Mexico. He added that other minerals include rare earth metals like neodymium and praseodymium, both used in the manufacturing process of magnets, electronics, and weapons. Nonetheless, a spokesperson from the Ministry of Energy, the organism in charge of mining in Mexico, said that Senator Armenta’s list was neither official nor final, and that the definite list would be set by the Mexican Geological Service at a later date.

So far, as reported by MBN, the political climate at congress isn’t stable. MORENA and its allies need an additional 57 votes to pass the reform, and only if allied parties like the PVEM are on board. Other highlights include the absolute rejection of the reform from both PAN and the minor party PRD, while PRI, the third party in the major opposition alliance in past June’s midterm elections, has said it is open to negotiations. Overall, MBN experts agree that MORENA will necessarily need to find more compromise in its strategies should they want the reform to pass.