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News Article

SENER will Administer Lithium-Focused State Company

By Karin Dilge | Tue, 06/07/2022 - 17:42

President López Obrador announced that the Ministry of Energy (SENER) will harbor the new company in charge of exploiting the country’s potentially highly profitable lithium.

López Obrador said there will be no new concessions to private companies, neither foreign nor national. He added that the existing concessions will go under revision and that companies that already have permits to exploit lithium will be allowed to do so. Those who hold concessions to extract other minerals will be able to do so except for lithium if this mineral overlaps.

“Without lithium, the energy transition will be problematic. It is essential for batteries, which are linked to the automotive industry. There is room for agreements, but [lithium] is property of the Mexican people,” added the president.

Furthermore, he highlighted that the state company in charge of these natural resources will be able to establish collaboration agreements with those looking to buy raw materials but repeated that permits to extract lithium will not be granted.

Currently, there are various existing concessions for lithium exploitation, but they will be under strict review to verify if the companies holding them comply with all requirements and if they are carrying out their activities according to what is established in the contracts.  

The recently approved Mining Law reform banned the possibility of new private participation in lithium and other resources deemed “essential,” although the reform does not specify what these resources exactly are. It has created an uncertain environment in the mining industry, which may result in the loss of investment and jobs, some experts fear. Within this context, mining companies have shown interest in other producing countries in the region. Nevertheless, if private participation in a different form is still in the cards, this may change the outlook for private investors.

If the reform is changed to allow private participation, 350,000 jobs would be added to the more than 3 million mining industry already offers, according to the National Confederation of Industrial Chambers (CONCAMIN). In contrast, the reform may cause Mexico to lose billions in investment, as companies have shown more interest in South American lithium producing countries, including those that have developed projects in Mexico. For example, Gangfeng Lithium, which holds a key interest in the Bacanora Lithium Project located in Sonora, announced it started the construction of the Mariana Project in Argentina, through an investment of over US$600 million and an estimated production of 20,000t/y.

Pablo Rutigliano, Founder and Director, The Latin American Chamber of Lithium (CALBAMERICA), said that open markets are necessary, though they should be regulated well. He commented that Mexico’s recent lithium nationalization limits the industry’s development. “I am not pro lithium nationalization, I support the creation of a market where everyone can participate in establishing reference prices and in the exploitation and transformation of raw material in the region,” Rutigliano added.

The data used in this article was sourced from:  
Mining Mexico, MBN
Karin Dilge Karin Dilge Journalist and Industry Analyst