No Tax Incentives For Private Lithium Exploitation

The Governor of Sonora, Alfonso Durazo, said that although the recently created lithium company, Litio Para México (LitioMx) is open to collaborating with the private sector, this does not mean that these companies will benefit from tax incentives.

According to Durazo, the creation of LitioMx will foster the exploration and exploitation of lithium in the state, as both the local and federal governments aim to use the resource in the manufacturing of batteries and electric vehicles. Therefore, “LitioMx, the company appointed as responsible for managing this asset, which was declared as property of the state, will be able to work with private companies if they wish to participate in the exploration, production, refining and industrialization of lithium processes that take place in the state,” Durazo said. 

“Private players will be able to partner with LitioMx, with the only condition being that the benefits of lithium remain in Sonora,” Durazo added. 

On Sept. 2, 2022, MBN reported that President López Obrador announced that LitioMx will be a public-private company. López Obrador stressed that he decided to accept private investment since developing the new industry requires a heavy investment that the government cannot provide on its own. “We would not have enough if the company remains solely public, it requires a lot of investment. We will need the private sector. It will have a lot of support from national and foreign investors. However, we will make sure that Mexicans benefit above anyone else.” López Obrador said. 

Despite the government’s desire to work with the private sector, the latter has split opinions on the matter. The China-based Ganfeng Lithium, which holds the largest lithium deposit in Mexico, expressed its will to collaborate with LitioMx. However, other industry insiders say that regardless of the potential benefits, the government has not provided a structured framework for the regulation of private participation. “The Mining Cluster perceives a certain level of uncertainty because we do not know how the development of projects and the value chain will be managed now that it is controlled by the federal government via LitioMx,” said Alberto Orozco, Sonora’s Mining Cluster. 

Ramón Luna, President, the Association of Geologists and Mining Engineers of Mexico, said that it is positive that the government is looking to joint efforts with the private sector. He argued that the joint venture will combine the technology and experience of the private sector with the government’s access to efficient permitting processes.