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News Article

Lithium Nationalization Will Also Benefit the US, Says President

By Paloma Duran | Fri, 07/15/2022 - 12:29

In a meeting between the Presidents from the US and Mexico, President Andrés Manuel López Obrador assured that Mexico's decision to nationalize lithium was a great achievement for both countries, since the US will be assured access to the white gold as a close trading partner. However, experts warned that the nationalization of lithium will bring more problems than opportunities for both countries.

On July 12, López Obrador met with US President Joe Biden to discuss key issues such as energy, security, migration, trade and cooperation, among others. Regarding energy, López Obrador stressed that the Mexican government's decision to nationalize lithium, a key mineral in the green energy transition, was the right choice as it will allow Mexico to diversify its energy sources. In addition, he emphasized that the resource mineral will also benefit Canada and the US, who will gain close access as key, USMCA-backed trading partner of the country.

“Lithium is a fundamental mineral and an input to advance our goal of not depending on fossil fuels. Lithium will be available for the technological modernization of the automotive industry among our great allies, the USMCA countries,” said López Obrador.

Meanwhile, Biden said there he agreed with López Obrador on many issues. However, without specifying, he said other topics need to be discussed further. Nevertheless, Biden stressed that the reunion shows the commitment of both countries to work closely together.

US experts warned that despite the opportunities that the US and Mexico share, there are  several issues threatening their growth. US Trade Representative Katherine Tai highlighted that one of the main threats is Mexico’s policy, such as the controvelsial energy reform and the nationalization of lithium, which could go against the ideals of the USMCA. Tai explained that the nationalization of lithium violates the multilateral trade agreement, since any restrictive measure, not only in the constitutional framework but also regarding secondary law, clash with the commitments Mexico made..

Kenneth Smith, a Key Negotiator of the USMCA, explained that the Mining Law reform violates USMCA since lithium was not previously stipulated in the treaty as an exclusive resource. Smith explained that USMCA specifies that only radioactive minerals are considered state-exclusive. Changing lithium’s condition would violate chapters 14 and 22 of the USMCA,which concern investment and state-owned enterprises, respectively.

Previously, US senators Bob Menéndez, Jeff Merkley, Tim Kaine and Brian Schatz tried to pressure Biden to stop the nationalization of lithium in Mexico. “This policy would contradict the USMCA’s prohibition of new investment restrictions and exacerbate national security concerns related to critical mineral scarcity. It would also threaten US$44 billion in private investment in Mexico’s energy sector, will negatively impact U.S. private sector investment in Mexico and is antithetical to the historically strong US-Mexico economic relationship,” said the senators.

 

The data used in this article was sourced from:  
MBN, Foreign Relations, News Atlanticist, The White House
Photo by:   Kumpan Electric
Paloma Duran Paloma Duran Journalist and Industry Analyst