MEXICO.- The reform to the Mining Law makes Canada’s terse romance with Mexico uncomfortable. The investments of the second trading partner are mainly focused on mining. And in recent years, it has bet heavily on lithium: six of the eight current concessions are from Canadian companies.
The exact steps that will be followed after the vote in the Mexican Chamber of Deputies to consolidate the nationalization of the key mineral in the electronics industry are not yet known, but the State will take control.
Hereinafter the exploration, exploitation and use of lithium is declared to be of public utility, for which reason no concessions, licenses, contracts, permits, assignments or authorizations for the exploitation of lithium and other strategic minerals.
President Andrés Manuel López Obrador -who sent the initiative after the setback in the electricity reform that would remove participation from the private initiative- considers it key to recognize that lithium is the nation’s heritage and intends to create a decentralized public body to take charge .
The decision goes against the changes that were made over the years 90 with former president Carlos Salinas de Gortari, promoter of the Free Trade Agreement (today T-MEC) and, according to some analysts, would get Mexico into trouble for the violation of some of its provisions .
“Lithium cannot be reserved as an exclusive strategic mineral for the State, if this sector in particular was not already reflected in the treaty as a specific reserve. And it is not,” warned Kenneth Smith Ramos, former head of Mexico’s technical negotiation for the T-MEC, in a presentation that he delivered months ago to the Chamber of Deputies during the Open Parliament forums on the electricity reform.
“Any constitutional reform and any legal or regulatory change must be compatible with Mexico’s international commitments. Mexico cannot adopt more restrictive measures than those that it has already adopted in other treaties”, said the T-MEC negotiator in the presentation that remained in the White Paper on the Open Parliament forums.
For López Obrador, state possession of lithium is a matter of national security and interpretation of the agreements. Currently, the Mining Law does not establish any particular regulation on “white gold” or “new oil” (as lithium is also known) and only mentions it once in article 4.
There is still no official position by the Canadian government.
Importance
The global demand for lithium increased due to its use in ion batteries (rechargeable batteries), which is why it is considered a “friendly” material with the environment for use in cell phones, laptops, digital cameras, electric vehicles, among others.
Energy storage in lithium ion batteries is one of the main alternatives for renewable energies stop being intermittent, and thus contribute to the decarbonization of the electricity sector.
According to information from the consulting firm Trading Economics, the value of lithium as of April 5, 2022 it was of 78,000 dollars per ton, five months ago (on 31 December 2020) was eleven times lower than 7,000 dollars.
Because the automotive industry is one of the cornerstones of the T- MEC, Mexico has a position in the manufacture of “clean” batteries because the trade agreement that requires the three countries to produce at least one 75% of the components.
Ford, General Motors, BMW, Mercedes Benz, and other companies have planned for the 2030 that most cars move thanks to rechargeable batteries.
In Mexico there are currently 75 foreign capital mining projects in alliance with Mexican capital for the lithium extraction that are controlled by 000 companies. These projects represent 97,000 hectares under concession.
In addition, there are half a million more hectares associated with lithium extraction, which were in process and would be stopped after approval. of the reform to the Mining Law.
The work
An analysis by the Canadian consultants GeoComunes and MiningWatch, to date only three companies have advanced with their extraction projects in Mexico: Bacanora Lithium, Organimax and One World Lithium and the rest are mining projects of small companies that depend on speculation in Canadian stock markets to capitalize.
However, they had obtained concessions in Sonora, Chihuahua, Coahuila, Zacatecas, Jalisco and Puebla.
The project with the greatest progress, however, is that of the British company, formerly Canadian and today Chinese, Bacanora Lithium, in Sonora, which is considered by some s specialists such as “the lithium mining project with the largest proven reserves worldwide”.
Until the victory of Andrés Manuel López Obrador, in 2018, the company thought of a production of 17,520 tons in the following two years but against to the president’s position, postponed its projections for 2023.
In Zacatecas, where the main bets of Canadian firms with lithium are located, the local Secretary of Economy, Emilio Varela, revealed that so far only OrganiMax Nutrient Corp is the only company that has declared the discovery of lithium in economically profitable quantities in the state.
He specified that the company of Canadian origin, with a Mexican subsidiary, Grupo Minero Alset continues with exploration works in three mining concessions in La Salada, of 300 hectares in Fresnillo; La Colorada, with 110 hectares in Villa de Cos; in addition to El Agrito and Las Casas, of 520 hectares, also in Villa de Cos.
According to the Statistical Review of World Energy 2021, the countries that concentrate the reserves of the 78% of lithium in the world are Australia, Chile and China. Meanwhile, Argentina, Brazil , Portugal, the United States and Zimbabwe represent 20% of world reserves and 13% of lithium production.
2.8% of the reserves and the remaining 0.6 percent of production are in other parts of the world.
With these statistics, the Mexican bet would be more on geography and economic integration. On the other hand, it would have the challenge of extraction costs.
“Getting the lithium it is expensive”, said the Secretary of Economy of Zacatecas, where the interested companies took time to decide whether to extract or not because they had to justify that obtaining the metal was profitable.
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