Olinia Faces Challenges Over Mineral Shortages

The newly announced EV manufacturer Olinia faces scrutiny over its feasibility and long-term viability, especially due to its reliance on critical minerals with severely constrained sourcing.

Olinia will be implemented through a public-private investment scheme aimed at addressing the demand for compact, affordable, and zero-emission urban vehicles. The production of electric vehicles relies on critical minerals, requiring approximately 80kg of copper, 30kg of nickel, and 30kg of graphite. Additionally, EVs demand between 10kg and 20kg of lithium, 10kg of manganese, and approximately 8kg of cobalt, along with other essential elements such as iron, neodymium, samarium, and terbium.

While Mexico is well-positioned as a global producer of minerals like copper, manganese, iron, and graphite, in 2023, the Constitutional Points Commission approved an initiative to prohibit new open-pit mining concessions, a move that directly impacts the availability of these key materials. Copper, the most essential mineral for EV production, is primarily extracted in Sonora through open-pit mining. 

Recognizing this misalignment, President Sheinbaum firmly urged commission members to reconsider the implications of the proposed restrictions and initiated discussions on regulatory frameworks to balance environmental protection with resource security. However, no further details have been disclosed.

Regarding lithium, the 2025 Economic Package allocates MX$12.9 million to LitioMX, a 31.6% increase from 2024, reflecting the administration's prioritization of lithium. While funding has risen, experts argue that the allocation remains insufficient for an initiative requiring significant investment. 

“If Mexico aspires to establish a competitive domestic electric vehicle industry, it must also implement a strategic approach to securing the necessary raw materials. It must also recognize the strategic importance of its mineral wealth. Without a coherent and sustainable policy framework, the ambition of positioning Mexico as a leader in the global energy transition will remain unfulfilled,” said Esther Arzate, Professor, UNAM.