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Mexico moves ahead with lithium nationalization plans

  • Wednesday, November 18, 2020
  • Source:ferro-alloys.com

  • Keywords:Mexico,lithium nationalization
[Fellow]Mexico moves ahead with lithium nationalization plans

[ferro-alloys.com]Mexico is moving ahead with plans to nationalize its emerging lithium industry after a member of the ruling Morena party introduced a draft bill in parliament last week, which calls for the battery metal to be deemed the exclusive property of the nation, with production controlled by the state.

Alejandro Armenta, head of the Senate’s finance commission, is proposing the creation of a new state-owned entity, LitioMex, to regulate lithium mining.

“It is not about closing the door to investment,” Mena said in an online session of the parliament. “There needs to be regulation (…) We are currently giving away our lithium to Chinese, Americans and Canadians (…) We shouldn’t be a paradise for exploitation. That’s called looting.”

Mexico has already scared private investors away by renegotiating gas pipeline contracts that the government declared exorbitant. It has also attempted to change regulations for renewable energy projects.

Eyes on Sonora

While the silver-rich country is not a lithium producer, the situation is about to change when Bacanora Minerals (LON:BCN) and JV partner Ganfeng Lithium begin commercial production at their Sonora project, which is expected in 2023.

The mine will initially produce 17,500 tonnes of lithium per year. At full-tilt, Sonora will generate 35,000 tonnes of the battery metal per year.

Hong Kong-listed Ganfeng, which has agreements to supply lithium to Tesla and South Korea’s LG Chem, recently increased its stake from 22.5% to 50% in the project, which it believes to be “world-class.”

Chief executive Wang Xiaoshen has expressed its reservations about the country’s plans for its lithium industry.

“Nationalization may not be a good idea; there are many bad examples of nationalization of resources,” Wang told FT.com in September. “An example is Bolivia. There are big lithium resources there but for many years no project has been built because Bolivians don’t allow foreign companies to own mining properties. That’s a big hurdle for attracting investment.”

Armenta, however, claims the value of Mexico’s lithium resources is more than four times the country’s sovereign debt and, as such, could be a solution to the nation’s current economic woes.

Prices for lithium are expected to climb by 2022, when shortages in the market caused by curtailed production and halted expansions start to emerge.

Before coronavirus, lithium prices were in free fall due to an avalanche of new supply. The glut made majors tame their growth plans.

BMI had forecast supply at 572,000 tonnes for 2023, but now sees that number at 543,000 tonnes, with a shortfall of 8,000 tonnes. The company believes the deficit in later years will grow significantly.

(Mining.com)

  • [Editor:王可]

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