Mexico eyes state monopoly to tap lithium rush

6th October, 2021.      //   General Interest, Market Intelligence  // 

 

Mexico plans to move towards a state monopoly in the exploration and mining of lithium, a vital material in the production of electric car batteries, the government said .

The proposal is included in a constitutional reform bill submitted by President Andres Manuel Lopez Obrador to the lower house of Congress.

If approved, future concessions to extract minerals considered strategic, such as lithium, will not be awarded to private firms, interior minister Adan Lopez told reporters.

“The state will control the exploration and production of these minerals,” he said.

Eight concessions already granted for lithium exploration would remain valid as long as the companies make the necessary progress towards starting production, the government said.

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.

The British-based Faraday Institution, which specializes in researching electric batteries, has called the scramble for lithium and other metals used to make them a 21st century “gold rush.”

Although Mexico has not set a date for banning sales of new gasoline and diesel cars, it is home to assembly plants for major brands including Ford, General Motors and Audi.

Lopez Obrador’s reform bill also seeks to strengthen the state-owned Federal Electricity Commission (CFE), rolling back the effects of liberalization that the leftist president says favored private companies.

The reforms would ensure that CFE has 54 percent of the Mexican electricity market, compared to 46 percent for the private sector.

Lopez Obrador said the move was not aimed at nationalization, but rather to protect CFE’s place in the market and prevent soaring power prices.

His efforts to boost the state’s role in the energy sector have caused concern among investors and foreign governments, including in the United States.

Electricity reforms passed by lawmakers in March were blocked by a judge to the relief of environmentalists, who saw them as a major setback to efforts to switch to renewable energy.

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