Mexico initiates nationalization of lithium

RIO DE JANEIRO, BRAZIL – Mexico took a step toward nationalizing lithium on Monday after deputies approved a reform that bars private companies from exploiting the mineral, which is essential for electric car batteries and new technologies.

The mining law reform, which has yet to be considered by the Senate, was approved by 298 votes with support from the ruling Morena party, its allies and the opposition Movimiento Ciudadano.

The proposal was sent to the legislature by President Andrés Manuel López Obrador on Sunday evening, shortly after his initiative to amend the constitution for the energy sector failed in the Chamber of Deputies, requiring two-thirds of the vote.

However, the reform of the mining law, which is secondary, required the approval of half of the 500 deputies, and Morena and his allies easily managed to suspend all legislative procedures to pass the reform within a few hours.

The text sent by López Obrador designates lithium as part of the national heritage and leaves its exploitation and use to a state-owned company, without the participation of private parties, domestic or foreign.

Previous governments extended eight concessions, but the reform does not indicate whether they will remain in force. López Obrador has indicated that the permits will be respected if the private companies can demonstrate that they are close to starting production.

The failed constitutional reform initiative for the electricity sector called for the nationalization of lithium and the reservation of at least 54 percent of power generation for the federal government’s Comisión Federal de Electricidad, which currently manages 38 percent.

López Obrador’s efforts to reform the regulatory framework for the energy sector are opposed by the governments and companies of the United States, Canada (Mexico’s partner in the A-ME trade agreement), and Spain, which view them as hostile to investment.

The Senate is also dominated by the pro-government party, and amendments to the mining law are expected to pass quickly.

Mexico has projects in the exploration phase, the most advanced in the northern state of Sonora, but experts say it could take up to two decades for them to become profitable.

With information from AFP