Mexico plans to open lithium mines to private investment

02/06/2021

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, following the June 6 mid-term elections, which will renew the Chamber of Deputies.

Economy Secretary Tatiana Clouthier stated last month 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.

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.