Will the Lithium Industry Flourish Under the New Administration?

President Claudia Sheinbaum announced that one of her administration's primary objectives is to establish a comprehensive lithium production chain in Mexico. In her first days in office, Sheinbaum emphasized the importance of advancing the Sonora Plan, which seeks to expand solar energy production and strengthen supply chains for lithium, copper, semiconductors, and electromobility. Despite the country's potential and advancements in lithium extraction technology, however, experts remain skeptical about the feasibility of these promises.

Lithium is a crucial component to make this plan a reality. In general, this element can be found in rocks, brines, oil wells, geothermal fields, clays and oceans. However, only brines and rocks have proven to be viable for extraction methods. In Mexico, most of the lithium reserves are found in hard-to-extract clay deposits, which are very expensive and difficult to access. Fernando Alanis, Former President, CAMIMEX, added that Mexico’s lithium has a concentration of only 0.001%/t and, to bring it to a battery percentage (30%), the cost and energy demand would be very high.

To address the challenges associated with lithium extraction, a cooperation agreement between the Argentine and Mexican governments was reached. This initiative will foster collaboration between researchers from both countries, with a focus on understanding lithium extraction methods used abroad. However, Sheinbaum highlighted that the Mexican Petroleum Institute (IMP) and the National Council for Humanities, Sciences, and Technologies (CONHACYT) have already developed a new extraction technology, positioning Mexico as a leader in this field.

"The objective is to implement this technology so that we can extract lithium here in Mexico and keep the entire production process within the country. This is the core of the Sonora Plan, which was launched with LitioMX, the state-owned company overseeing lithium’s nationalization. Our task is to further develop it," she said.

Sheinbaum stressed that PEMEX could also enter into a partnership with LitioMx, further strengthening Mexico's role in the lithium value chain. This move is also seen as a strategy to diversify its business portfolio and generate new revenue streams. Sheinbaum pointed out that this initiative aligns with trends in other countries where oil companies are already venturing into the lithium sector. 

To further boost the lithium supply chain, Sheinbaum is promoting "Olinia," a fully electric vehicle to be designed and assembled by Mexican engineers. She emphasized that Mexico aims to use its lithium resources for Ev battery production, with a strong focus on developing local technological expertise. "We will initiate lithium production leveraging our own technological development," she said.

However, a major hurdle for the industry’s success, according to Oscar Ocampo, Energy and Environment Coordinator, Mexican Institute for Competitiveness (IMCO), is the insufficient public funding allocated to support the growth of Mexico's lithium industry. He pointed out that only MX$36.8 million (US$1.91 million) have been assigned to LitioMx. "This amount is clearly insufficient for a project that could require billions of dollars in investment." 

Ocampo also highlighted that despite the government's claims of newly developed extraction technology, there is currently no commercially viable method for extracting lithium from brines.  A report from the Ministry of Energy, covering the period from September 2023 to June 2024, noted that LitioMx has so far only outlined extraction routes for lithium in clay, with a pilot plant in the works. The report also highlighted collaborations with CFE and the National Institute for Electricity and Clean Energy (INEEL) to investigate geothermal zones with lithium potential. Additionally, partnerships with CONHACYT have been established to research lithium extraction from clay in laboratory settings.

Another obstacle is the limited role of the private sector in the lithium supply chain, particularly highlighted by the new reform promoted by Sheinbaum that prohibits granting lithium concessions and establishes a state monopoly, which will be stipulated in Art. 27. Additionally, the potential ban on open-pit mining, which has received support from Claudia Sheinbaum, poses a significant threat to the lithium sector.  “It is not feasible to exploit lithium without open-pit mining because these deposits are composed of disseminated lithium. In contrast, silver and gold are found in concentrated veins—fractures filled with metal oxides that enable underground extraction,” says Luca Ferrari, Academic, UNAM.  

While the country faces significant challenges in advancing the lithium industry, Sheinbaum is confident that lithium production will commence during her administration. "I believe the Sonora Plan is one of the most visionary projects, positioning Sonora at the forefront of national development. First, it focuses on decarbonizing the economy by enhancing solar energy. Second, it proposes an industrial policy linked to electromobility," she explained. “We will make Mexico a scientific and innovation powerhouse. By prioritizing local technological development and investing in research, Mexico has the opportunity to effectively harness its rich lithium resources.”