Lithium, Silver Deficits Loom Amid Mexico's Mining Constraints

The global race for critical minerals is accelerating toward a structural crunch, with lithium and silver deficits looming as EV penetration and AI infrastructure expand exponentially. While Mexico holds a dominant position in silver and significant potential in lithium, the current state-led exploration monopoly and limited funding, at only MX$13.9 million for LitioMx in 2026, are hindering its ability to compete with Chile or Australia. To avoid being left out of the investment race, Mexico must reconcile its regulatory restrictions on mining methods with the technical demands of the energy transition. 


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Global energy and digital transitions are pushing lithium and silver into structural supply deficits, as industrial demand for EVs, solar photovoltaics, and artificial intelligence (AI) outpaces current production capacity. While Wood Mackenzie and the Silver Institute warn of a multi-billion-dollar investment gap and a looming supply shortage as early as 2028, Mexico, the world's top silver producer with significant lithium reserves, is struggling to capitalize on this critical minerals rush due to restricted state-led exploration models and limited federal funding.

Global lithium demand could reach 13Mt by 2050 under an accelerated energy transition, more than doubling base case projections according to Wood Mackenzie’s latest Energy Transition Outlook for Lithium. Without significant new investment, supply deficits could emerge as early as 2028. Even under the base case scenario, existing supply projects are unlikely to meet demand beyond the mid-2030s, highlighting a requirement for sustained investment across the value chain.

Wood Mackenzie models four energy transition pathways with lithium demand in 2050 ranging from 5.6Mt LCE under a delayed transition to 13.2Mt LCE in a net-zero scenario. Under the Delayed Transition scenario, the market remains adequately supplied until 2037 before entering a deficit. 

The Country Pledges scenario sees deficits emerge around 2029, requiring an additional 6.7Mt LCE of supply by 2050. In the Net Zero scenario, deficits are expected to begin in 2028 and persist through mid-century, requiring approximately 8.5Mt LCE of additional supply. “The lithium market is heading into a supply crunch much sooner than many industry players expect,” said Allan Pedersen, Research Director, Wood Mackenzie.

EVs remain the primary driver of demand growth, accounting for 72% to 80% of lithium consumption across scenarios. EV penetration is projected to reach approximately 75% by 2040 under the Country Pledges scenario and 95% under the Net Zero scenario. Additionally, energy storage systems are expected to grow at 6% to 7% annually as renewables dominate new power capacity. Rechargeable batteries across all applications will account for 96% to 98% of lithium consumption by mid-century.

Meeting this demand requires a total investment ranging from approximately US$104 billion under a delayed transition to US$276 billion under a net-zero scenario. Under the Base Case, investment requirements are estimated at US$114 billion, while the Country Pledges scenario requires US$236 billion. Investment is expected to peak between 2030 and 2034 due to the need for new mining capacity and refining infrastructure. Recycling is projected to grow at 13% to 16% annually, contributing between 2.3Mt and 2.7Mt LCE by 2050, though it is unlikely to address near-term shortages. "This is a $100-275 billion investment story depending on how the energy transition unfolds. The winners will be those who can deploy capital efficiently while navigating trade fragmentation and securing regional market access,” Rebecca Grant, Senior Research Analyst, Wood Mackenzie.

Silver Outlook Points to a Deficit 

Silver is also expected to reach a sixth consecutive year in deficit, according to the Silver Institute. This structural imbalance is driven by silver’s role in the technological transformation of the global economy, with industrial demand projected to accelerate through 2030 across solar energy, electric vehicles (EVs), and artificial intelligence (AI) infrastructure.

The solar sector has become a primary driver of industrial silver consumption, rising from 11% of industrial demand in 2014 to 29% in 2024. Despite technological shifts reducing silver loading per cell, the sheer volume of global installations remains a dominant factor. For instance, the EU aims to deliver at least 700GW of solar capacity by 2030, a target expected to sustain high levels of silver consumption despite a reduction in government subsidies in other regions.

The transition to EVs is significantly increasing silver usage, as these vehicles consume between 67% and 79% more silver than traditional internal combustion engine (ICE) vehicles. On average, an EV requires 25g to 50g of silver for components such as battery management systems and power electronics. Global automotive silver demand is forecast to grow at a compound annual rate of 3.4% between 2025 and 2031, with EVs projected to overtake ICE vehicles as the primary source of automotive silver demand by 2027. By 2031, EVs are expected to account for 59% of this market segment.

The expansion of AI and cloud computing is placing unprecedented demand on digital infrastructure. Total global information technology (IT) power capacity increased from 0.93GW in 2000 to nearly 50GW in 2025, representing a 5,252% increase. This growth in power demand translates directly into a need for more computing hardware and physical infrastructure, both of which rely on silver for its electrical and thermal conductivity. Governments in the US, UK, EU, and China are currently streamlining regulations and providing tax incentives to expand data center capacity, further cementing silver's role in the digital transformation.

Mexico’s Constraints in Lithium and Silver 

Despite lithium being declared a strategic mineral, Mexico’s state-led sector faces significant structural and financial hurdles. The state-run company LitioMx continues to operate with a budget primarily restricted to administrative and salary expenses. For 2026, the Federal Budget allocated MX$13.9 million to LitioMx, a 7.7% increase over the MX$12.9 million assigned in 2025, yet critics argue this remains insufficient for the multi-million-dollar exploration and technical processes required to define and extract the resource.

Technical and regulatory contradictions further constrain progress in the sector. While Mexico holds an estimated 1.7Mt of lithium reserves across 82 identified deposits, with major concentrations in Sonora, Puebla, and Oaxaca, current mining regulations maintain restrictions on mining. 

Industry leaders note that lithium extraction typically requires open-pit methods, creating a misalignment between the mineral's strategic designation and the legal framework governing its extraction. Consequently, while global production reached 1Mt of LCE in 2024, Mexico remains behind competitors like Chile and Australia in securing supply contracts for the automotive and battery industries.

While Mexico continues to be the world’s largest silver producer, the metal faces the same challenges as other minerals. With exploration being handed exclusively to the State by law, the sector expects the establishment of clear environmental and operational permitting timelines alongside a modernized legal framework to ensure jurisdictional stability. CAMIMEX emphasizes that institutional certainty and the strengthening of security protocols in remote regions are fundamental to sustaining long-term productivity.

Rubén del Pozo, President of AIMMGM, warned that mining exploration decreased by 11.5% in 2024, leading to a potential deficit of future projects. Although the Mexican Geological Service (SGM) has been directed to conduct exploration in Sonora, Sinaloa, Durango, and the State of Mexico, fiscal limitations prevent it from addressing the full scale of the country’s potential. Del Pozo advocated for a mixed exploration model where the State maintains oversight while private industry and academia contribute resources and technology, stressing that the current lack of work for geologists will eventually impact the entire industrial value chain.