Private Sector May Eventually Participate in Lithium Exploitation

On Apr. 20, Mexico’s Congress approved the Mining Law reform to nationalize lithium, putting the resource’s exploitation firmly in the state’s hands. For this purpose, the government has to create a national company. Because experts argue this could be difficult, private participation would be requested eventually.

Experts highlighted experiences in Bolivia. Following a coup, the government that took over considered the participation of private companies in lithium exploitation. After President Luis Arce took back power, these plans were quickly scrapped. According to Jorge Campanini, Researcher at the Center for Documentation and Information of Bolivia, the Bolivian government has changed its technological strategy, which previously relied on private investment. Bolivia has an estimated 21 million tons of lithium, which represents around 25 percent of the globally discovered reserves. Nevertheless, the South American country does not rank among the largest producers.

Bradford Cooke, founder and CEO, Endeavour Silver, told MBN that lithium exploitation as a state-only enterprise faces challenges because it requires highly specialized technology and skills that the country has not yet developed. Like other mining activities, lithium extraction is a capital-intensive activity, with returns only materializing in the long term. Cooke also expressed his concerns regarding corruption, highlighting the mismanagement and under-performance of state oil company PEMEX.

“For Mexico, we should consider its poor capacity for efficient exploitation since the country does not possess the necessary technology, nor the experience and economic resources to invest and bear the costs of the mining supply chain. This represents a great challenge for the economic success of these projects,” agreed Aleida Alonso, Researcher, UAM Xochimilco. 

Bacanora Lithium, located in Sonora, is the only lithium project developing in the country. Over the 12 years of the project’s life, an investment of over US$300 million has so far not yielded any production results. What is more, the project is expected to receive an additional US$400 million of investment. Bacanora spent five years developing a consistent methodology to determine the quantity of lithium in deposit. According to the Mexican Mining Survey (SGM), from 10 to 15 years are needed to determine if the deposits are viable. 

Gonzalo Monroy, Managing Director, GMEC emphasizes the risks for investment, pointing toward One World Lithium, which after investing millions in Baja California was eventually discouraged from further exploring its project. 

The Mexican Association of Mining Engineers, Metallurgists and Geologists (AIMMGM) stressed that Mexico’s lithium is located in clay deposits and that no country has produced lithium from this source yet. For this reason, the association argues Bacanora Lithium should develop production in an effective and cost-effective manner.