Mexican lawmakers pass lithium nationalization plan

·2-min read
Mexico plans to nationalize the mining of lithium, a vital material in the production of electric car batteries (AFP/STR) (STR)

Mexican lawmakers on Tuesday approved a plan to nationalize the exploration and mining of lithium, a vital material in the production of batteries for electric cars, cellphones and other technology.

The mining law reform submitted by President Andres Manuel Lopez Obrador puts the metal's exploitation in the hands of a state company, without the participation of private firms.

The plan was passed in the Senate with 87 votes in favor and 20 against, a day after it was approved by the lower house of Congress.

Lopez Obrador told reporters that eight concessions already granted to companies for lithium exploration would be reviewed to see "if the procedures were followed."

He mentioned a contract with the company Bacanora, controlled by China's Ganfeng Lithium, as one that needed to be scrutinized.

Previously, the government has said the concessions would remain valid as long as the companies make the necessary progress towards starting production.

"We're going to develop the technology (to exploit the deposits) or acquire it, but the lithium is ours," said Lopez Obrador, who was elected in 2018 with a vow to overhaul Mexico's "neoliberal" economic model.

He said that concessions to explore for the metal were granted for around 150,000 hectares of land during the government of his predecessor Enrique Pena Nieto.

Mexico does not yet produce lithium, and the economic viability and environmental impact of mining it is still unclear.

"There is no certainty that we have enough lithium to exploit," said Jaime Gutierrez, president of the Mexican Mining Chamber.

The reform was unnecessary and created "a lot of uncertainty" for investors in the mining sector, he told El Heraldo Radio.

Lithium is mined mostly in Australia and South America, while China dominates the supply chain.

Mexico's deposits of the metal are mainly found in the northern state of Sonora, where drug traffickers and other organized crime gangs operate.

Lithium "will be the exclusive property of the state and for the benefit of the people. Our resources will be safe and the energy transition will be guaranteed," Lopez Obrador's spokesman Jesus Ramirez tweeted.

The lithium plan was originally included in constitutional reforms aimed at strengthening the state-owned electricity provider, but that bill failed to win enough votes to pass on Sunday.

The power reforms had alarmed the United States and Canada, prompting warnings that Mexico was in danger of violating its trade commitments by favoring state-run entities heavily dependent on fossil fuels.

While constitutional amendments require support from two-thirds of lawmakers, the mining law reform only needed a simple majority to pass.

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