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Mexico stands up against China and announces the establishment of a state-owned company to use lithium

Mexico stands up against China and announces the establishment of a state-owned company to use lithium

President López Obrador wants to show, at least in rhetoric, that his government’s interest in lithium is serious. The President announced the establishment of a state-owned company for the utilization of the mineral and accepted it a proposal for electricity reform as the country’s strategic natural resource. “We are going to start a Mexican company for lithium. “We do not want to be in conflict with Russia, China or the United States,” the president defended on Wednesday. He then went a step further, warning that no domestic or international private company will be able to remove this resource from the soil because it belongs to the Mexican people and nation. The country’s largest deposit is now in the hands of the Chinese company Gangfeng.

It can be said that hæstv Mexico’s current relationship with lithium it’s rather platonic. With excessive optimism, the López Obrador government wants to conquer one of the largest nature reserves in the world, which no one has excavated at the moment. The deposits are only at the research stage. The largest of them, located in Sonora, was a concession to the Anglo-Canadian company Bacanora Lithium, which Gangfeng bought almost a year ago. The battery giant paid $ 264 million in exchange for 100% of the company’s share capital. “Making a parastatium for lithium is an event. Mexico has no plans or resources to develop this company. Its creation is not in the national development plan or in the energy plan, “says Gonzalo Monroy, director of the GMEC consulting firm.

Although of Sonoran Desert Not a single gram of lithium carbonate has been released yet, the market value of Bacanora rose to 170 million dollars and Gangfeng to over 220 million dollars. The company Has published that Sonora has proven stocks of just over three and a half million tonnes of lithium: more than 40 times the amount consumed worldwide in 2019. A quantity that is profitable enough for the company, with a concession of around 100,000 football pitches which will last for 50 years, plans to stay in Mexico for the next three centuries.

Following the decline in metal prices in international markets during the pandemic, the private sector did not expect to face a sudden Enthusiasm Lopez Obrador for lithium, but the climate economy, the electric car market and increased global demand (55% higher in 2022, according to S&P) have raised prices by 400%. Ore is now traded over $ 35,000 a ton in international markets. Australia, China and Chile are the main lithium-producing countries in the world and according to the International Energy Agency, the demand for lithium needs to multiply by 40 by 2040 to meet the zero emission requirements that countries have been looking for through energy conversion from fossil fuels to clean energy. “We have to protect this coveted mineral. Do not [podemos] allow it to go into the hands of companies or authorities, “said López Obrador on October 13 last year. In the face of such a juicy and promising future, everyone wants to appear in the picture.

The president has even threatened to launch an investigation into the Federal Economic Competition Commission (Cofece) for planning a covert operation to reduce Mexico’s lithium and benefit the Chinese government by handing over the Sonora concession. López Obrador demanded that Cofece’s resolution put Mexico at the center of a trade war between the United States and China. “That’s why my usual disagreement with these independent organizations is because it was a platform they created to nullify the government, so if a new people’s government came it could not make decisions, it would mean neoliberalism,” the president said. .

To date, companies with a research and utilization plan approved by the Ministry of Economic Affairs have breathed a sigh of relief. The electricity reform proposal itself states that these concessions will be respected. Now the president is taking a step back and saying that they can process other minerals, but not touch lithium. The Mexican Department of Mining (Camimex), which includes the main companies in the industry, has expressed its concern in this regard and points out that the financing of mining projects can be “very burdensome” for the country. Among other things, because Mexico does not have the technology or knowledge to develop the lithium industry. “The president is not aware of the complexity and the technology [que se necesita] to achieve the purity level of using lithium for commercial purposes. This is a technology that Mexico does not have at the moment and is in the hands of private companies, “says Monroy.

In Mexico, there are 36 licenses to exploit the mineral, of which only 27 are active, in the hands of three foreign companies, including Gangfeng, according to GeoComunes, Network of People Affected by Mining and MiningWatch Canada. Sonora is the most advanced project. Its management estimates that the new plant will start operating in 2023 and have production in the first year of 20,000 tonnes, a figure that will reach 50,000 tonnes in the coming years and that it will need an investment of 2,000 million dollars to carry it out. The goal of multinational companies with a presence in Australia, Argentina and China is to export lithium from Mexico to the Asian market, which produces 90% of batteries.

Meanwhile, from the National Palace, it is tempting to use the discovery of one of the largest lithium deposits in the world to foster optimism in the ranks of the so-called Fourth Transformation. For López Obrador, the future is white and bright, like the mineral that underlies Sonora.

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