Lithium is considered by many as the oil of the future as it represents a source of energy with long autonomy. It is for this reason that President Andrés Manuel López Obrador seeks to nationalize this mineral by strengthening the Federal Electricity Commission:
"This is a strategic mineral. Without this mineral in the hands of the nation, we would not be able to develop. There is a global dispute about how the hegemonies want to maintain their dominion over lithium", said AMLO. Faced with this new reality, different mining groups in charge of half of the lithium production at a global level created a world association with headquarters in London.
President Andrés Manuel López Obrador sent to Congress a few days ago the constitutional reforms he seeks to create for the energy sector. If the reform is approved, then the Mexican State would be the only one with the power to extract, exploit, commercialize, distribute and store lithium. Economist and energy specialist, Paul Alejandro Sanchez, explains: "If this reform passes, we are talking about a reform that is very difficult to roll back.
In other words, the following administrations will have to continue with this reform because it would again require three-quarters of the country's political forces to come together to pass a counter-reform at the constitutional level that would allow opening lithium to concessions to private and foreign companies".
And what will happen with the existing agreements?
In Mexico, there are at least eight concessions with foreign companies to extract lithium. In view of these agreements, the Secretary of the Interior Adán Augusto López assured that they will remain in force; what will no longer be granted will be the permits:
"The reform establishes a watershed for additional exploitations to the new ones that are currently being developed in the country, which is really one, which has 50% Chinese capital. It is a geostrategic move to give priority to national development over any foreign production pressure".
Lithium, a key factor to exploit industries in Mexico
Rodrigo Benedith, the former economic coordinator of the Mexican Embassy in Venezuela, is confident that the regulation of lithium will make the Mexican economy grow because it will provide an opportunity for the automotive industry to export manufactured goods through the T-MEC: "It is fundamentally about promoting an industrial policy that allows lithium to be transformed into high-value products for the country's economy."
This refers to the fact that lithium could be the key for Mexico to position itself as a competitive industry in battery production. Benedith described the potential positive impact of what lithium regulation would imply if we relate it to the electric car battery market:
"Currently, more than 60% of the demand for lithium comes from industrial uses and, although so far only 10% of this is for electric car manufacturing, there is a projection of a significant increase in electric car production. For example, Tesla alone has a production target of 30 million electric cars in the next few years and, therefore, the demand for lithium for its batteries in this industry will grow exponentially".
Mexico plans to open lithium mines to private investment
Lithium exploitation seems to be the answer to many of the planet's economic and environmental challenges; however, all the implications of this resource must be considered. Currently, Mexico does not have any lithium deposits in operation; meanwhile, in the states of Baja California, San Luis Potosí, Zacatecas, and Sonora, there are three lithium deposits in the exploration stage that contain this mineral.
Morena, the ruling party in Mexico, abandoned its plans to nationalize lithium production and is now promoting private investment to help develop the country's potential in the metal used to make batteries. Mexico, a major producer of copper and silver, is home to large potential lithium reserves. Most of it is found in hard-to-mine clay deposits, which are costly and technically complicated to extract.
Instead of establishing a state lithium monopoly, as proposed late last year, a bill will be drafted to promote a regulated market in the nascent sector. The bill will be presented in September with the start of a new legislative period.
The Bacanora Lithium company's beneficiation plant is currently under construction in the state of Sonora. The plant is expected to start operating in 2023, is designed to initially process 1.1 million tons (Mt) of mineral per year, during the first stage of the project; increasing, later, to reach 2.2 Mt per year in a second stage.
Due to the enormous potential of this activity, it is necessary to analyze and regulate its exploitation, production and uses in Mexico. Currently, 50 percent of the world's lithium is used for the development of high-performance batteries, although it is also used in the pharmaceutical industry.
Economy Secretary Tatiana Clouthier has stated that the Mexican government was considering a public-private partnership to develop lithium. She suggested that the state could have a 51% stake, a scheme that Armenta also supports. In the energy sector, private oil majors have mostly preferred to avoid alliances with state oil giant Pemex if the company is the operator of joint projects. It was unclear whether lithium investors would react similarly.
World's lithium production stood at about 82,000 tons last year, according to the U.S. Geological Survey.
The Belisario Dominguez Institute detailed in the report 'Lithium Regulation. Proposals and international comparison', that in the LXIV Legislature of the Mexican Congress (2018-2021) five initiatives related to lithium exploitation have been presented. Of these, four are pending review in the commissions of the legislative body of origin; the remaining one was withdrawn.
Among the objectives of the initiatives presented are the proposals to create a public agency called Litiomex, to establish the basis for the sustainable use of lithium minerals in the national territory and that lithium is considered as the property of the Nation so that no concessions would be granted for its exploitation.
As for the possible extraction volumes, there are still no precise figures of the expected production. However, in addition to extraction, the derived industry will have to generate technologies and trained professionals who can take advantage of the transformation and capacities of lithium in the necessary demands to satisfy the needs of the user population.
Growing demand for the mineral has spurred a global scramble to secure supply and the development of Mexico's lithium riches could help diversify global sources currently concentrated in a few countries, led by Australia and Chile. Lithium producers have been looking to aggressively increase production. Albemarle, for example, expects to double capacity this year, and rival SQM plans to raise lithium carbonate volumes by more than 70% by 2021.
Lithium is produced from brines, commonly found in South America, or from hard rock, usually in Australia, with extraction technologies largely limited to salt evaporation ponds and traditional ore processing. Lithium-rich saline brines account for approximately three-quarters of global production, with rock mining accounting for the remainder.
Sources: Tribuna de la Bahia