By Caroline Pulice
MEXICO CITY, Feb 24 (Reuters) – The Mexican government’s latest move to tighten control over its potentially lucrative lithium reserves does not solve the puzzle of how it could attract needed expertise from private industry and leave behind most of the profits. state coffers.
President Andrés Manuel López Obrador on Saturday signed his latest lithium decree establishing a mining area of more than 235,000 hectares in the northern state of Sonora, saying the existing concessions “are safe”.
But the ordinance also stipulated that “no lithium-related mining activity may take place” in the area.
The decree could pave the way for Mexico’s newly created state-owned company to gain exclusive rights to mine local reserves of the ore, coveted by rechargeable battery makers around the world, experts and analysts from the world said. industry.
“It is counter-intuitive to declare a public reserve, but the concessions already granted to date are respected,” said Fernando Quesada, a lawyer with extensive experience in extractive projects in Mexico.
Quesada added that the new decree could mean the government can use its power of expropriation as a tool to force negotiations with companies that already have concessions in the area, such as Chinese mining and battery maker Ganfeng, which controls the project. state-of-the-art lithium plant in Mexico.
Last year, López Obrador’s allies in Congress enacted a sweeping nationalization of lithium in a bid to ensure Mexico could benefit from the growing demand for the mineral, needed to power future fleets of electric vehicles.
Since taking office in late 2018, López Obrador has rejected new private investment in oil and gas, including joint venture partnerships between state-owned Pemex and potential private producers.
The president might view lithium the same way, and some pundits describe mining policy as an echo of his broader state-centric approach to commodities deemed strategic.
Armando Alatorre, a geologist and lithium expert, said the latest decree could lead to further changes to existing concessions, saying establishing a new legal mining area on top of existing mining concessions is confusing.
“It creates a lot of uncertainty for investors,” he said.
Neither López Obrador’s office nor Mexico’s economy ministry responded to a request for comment.
Created in August, state-owned LitioMx is likely to have more exploration work in the new mining area, BTG Pactual analysts said in a research note. But they said it was unclear whether these efforts will be carried out alone or in partnership with private actors.
“It is reasonable to expect that the newly defined locations can be assigned to LitioMx,” the note reads.
Studies suggest that Mexico may have around 1.7 million tons of lithium, but these deposits are mostly trapped in clay soils.
No commercial-scale lithium extraction from clay soils has been implemented so far, meaning Mexican deposits will likely require new technology, additional investment and possibly processing plants. .
BTG Pactual pointed out that LitioMx does not have the necessary “capacity, technology or mining knowledge”.
Such plants would require a significant expenditure commitment given their complexity, said mining and energy analyst Ramses Pech.
The expert stressed the need to minimize the political risks associated with the latest government decree so that Mexican lithium can hope to turn its raw potential into a successful long-term industry.
“They have to give you the certainty that the reserves they give you are going to be kept for years to continue to be exploited,” he said. (Report by Carolina Pulice. Editing in Spanish by Marion Giraldo)