Mexico taps into lithium to power foreign investments

Mexico noticed two near-simultaneous developments final month.

First, President Andres Manuel Lopez Obrador handed duty for the nation’s lithium reserves to the vitality ministry, tightening state management over the metallic that powers rechargeable batteries in electrical automobiles.

Days later, Tesla proprietor Elon Musk introduced a “giga factory” within the northern Mexico metropolis of Monterrey to supply the corporate’s best-selling electrical automobiles.

In a rustic with estimated lithium reserves of round 1.7 million tonnes, Mexico is pushing to keep up management over its assets whereas luring personal investments within the profitable sector.  

Last April, the Mexican President  – popularly recognized by the acronym AMLO – introduced his authorities’s resolution to nationalise lithium, paving the best way for founding LitioMx, a state-owned firm that may management extraction and advertising of the sunshine metallic.

He mentioned Mexico was implementing the measures in order that lithium deposits “cannot be exploited by foreigners, neither from Russia, China nor from the United States”.

In 2020, Latin America’s lithium trade reached 29.5 % of world manufacturing. The ‘Lithium Triangle’ – made up of Argentina, Bolivia and Chile – is estimated to carry 50 % of the world’s lithium deposits.

Isidro Tellez Ramirez, a researcher on the Economic Research Institute UNAM, says its deposits “place Mexico among the ten countries with the potential to produce lithium in the coming years”.

Jose Arturo Barbosa Moreno, a researcher and engineer on the National Technological Campus in Ciudad Madero, Tamaulipas  says Mexican lithium is present in clay, whereas elsewhere, it’s mined from brine or blended alongside “diverse minerals”. Lithium in clay lacks an “efficient manner” to use it, as one technique sometimes requires important water and chemical substances.

Nevertheless, a number of overseas corporations have already got a footprint within the nation.

Ganfeng Lithium Co, a Chinese lithium mining and battery producer, has essentially the most superior challenge in Sonora, the place the metallic deposits are concentrated. Rockland Resources Ltd, a Canada-based agency, has one other challenge named ‘Elektra’ in the identical area.

Advance Lithium Corp and Silver Valley Metals Corp, each Canada-based exploration corporations, have initiatives within the states of Zacatecas and San Luis Potosi, in keeping with a report revealed in February by MiningWatch Canada and Mexico’s community of individuals affected by mining (REMA).

In complete, there are round a dozen overseas corporations with lively mining concessions for lithium.

Demand for the metallic is projected to extend 40-fold throughout the subsequent twenty years because the world strikes in the direction of the Paris Agreement local weather aims to chop greenhouse emissions in order that temperature rise is saved “well below” 2.0 degree-Celsius this century.

Globally, China is main the best way, producing three-quarters of all lithium-ion batteries and over half of lithium, cobalt and graphite.

One report suggests the federal government may resort to the potential use of “expropriations” as leverage in negotiations.

Ganfeng Lithium Co has 9 concessions granted between 2010-2015, with some working till 2065.

However,  Tellez Ramirez expects concessions granted earlier than 2018 to Ganfeng Lithium Co to be revered, suggesting the reform didn’t entail “expropriation”.

The US’ lack of “hegemony” to China amid the geopolitical dispute has pushed lithium producers to arrange throughout Latin America to satisfy the demand of the US electrical automotive trade, which Tellez Ramirez says has allowed Mexico to place itself as “a potential producer”.

With mining below the path of the State to drive Mexico’s financial growth, Tellez Ramirez argues that the AMLO authorities is as soon as once more trying to reap the benefits of “offshoring”.

However, he argues that lithium was not nationalised final yr, as Mexico’s structure already stipulates minerals discovered within the nation’s subsoil belong to the nation, whereas the State has already granted concessions to events – each Mexican and Foreign.

Tellez Ramirez suggests Mexico’s lithium drive can’t be understood with out taking into consideration AMLO’s coverage shift in mining. 

Between 1982-2018, the sector acquired a number of advantages from “the declaration of mining as a preferential exercise over another (besides hydrocarbon exploitation); the elimination of any geographical restrict to mining concessions; the validity of mining concessions for 50 years with the potential of renewal for a similar interval and paying a payment that doesn’t exceed 7 {dollars}; the ability to repatriate the earnings obtained by overseas corporations with none tax, particularly these coming from the signatory international locations of the USMCA.”

“The present authorities didn’t eradicate these advantages however solely prohibited the awarding of recent mining concessions, contemplating that it had been an extra of previous administrations (between 13 % and 18 % of Mexico’s continental territory),” he provides.

Moreno hopes latest developments will assist Mexico to be extra unbiased.

He says 70 % of Mexico’s minerals are operated by overseas corporations, arguing it has had a detrimental financial influence on the nation.

“Like many Latin American countries, Mexico has allowed foreign companies to dominate many markets, which is bad for the country since it is difficult to be self-sufficient, despite having our own natural resources,” says Moreno.

However, with drought impacting the area, there are environmental considerations regardless of quite a few legal guidelines, laws and commitments.

“Regarding mining, like any other process, if it is not carried out efficiently, it can bring environmental consequences, but the fact that a foreign company carries out the mining does not guarantee that these consequences will not exist,” argues Moreno.

Ramirez says that “Mining is one of the least regulated activities in environmental terms,” underscoring the Sonora River spill, which has been referred to as the “worst environmental disaster in the history of mining in Mexico.”

In 2014, 40 million litres of poisonous leaching materials and heavy metals from a copper mine spilled into the Bacanuchi and Sonora Rivers in northern Mexico, travelling 160 miles and impacting 25,000 individuals.

MiningWatch Canada and REMA observe implications for water assets, with 47 % of initiatives round aquifers experiencing a water deficit.

“It is estimated that for each ton of lithium salts, 2 million litres of water evaporate, in addition to the fact that it is an activity that requires more than 2,000 tons of chemicals to process the metal,” explains Tellez Ramirez.

MiningWatch Canada and REMA observe quite a few detrimental impacts of mining, which they argue come “at the expense of the territories (water, land, biodiversity and culture) and the lives of the communities” and counsel the inexperienced vitality transition invariably contributes “to false solutions that capitalism provides to the socio-ecological and economic crisis we are experiencing.”

However, AMLO has mentioned Tesla will assist with “a series of commitments to tackle the issue of water scarcity”.

Source: TRT World