Mexican President Andr茅s Manuel L贸pez Obrador (AMLO) that all lithium contracts would be reviewed, partially contradicting previous comments in which he promised not touch licenses already granted to private companies, provided exploration work has already begun and all license requirements have been met.
L贸pez Obrador鈥檚 comments come after the country鈥檚 lower house of Congress passed an amendment to mining legislation that paves the way for the state to nationalize the country鈥檚 lithium reserves.
AMLO鈥檚 proposal was part of a constitutional energy overhaul聽rejected by lawmakers on Sunday. The amendment sought to tighten control of energy production by guaranteeing state-owned utility Comisi贸n Federal de Electricidad, or CFE,聽54% of the market.
L贸pez Obrador moved on Monday to introduce the proposal to nationalize the country鈥檚 lithium directly to Congress, using a presidential prerogative to send a limited number of bills directly to the floor, bypassing the involvement of committees.
鈥淚 make a respectful call to the legislators so that 鈥� we protect lithium and lay out the structure for a company, such as CFE, that will handle everything related to lithium, backed by the support of research facilities in the country and the experience learned from other countries,鈥� he .
The bill was approved on Monday by the lower house, only 24 hours after the same lawmakers had rejected the controversial reform of the energy sector.
The proposed law, now in the hands of the Senate, bans all private participation in the exploration and mining of lithium, which elevates to the category of 鈥渟trategic mineral鈥�.
The initiative has triggered worries among companies that already have lithium concessions in Mexico, including the one held by聽Bacanora Lithium聽(LON: BCN) in the country鈥檚 northwest. The company, owned by China鈥檚 Genfeng Lithium, is developing the giant Sonora project, which is slated to produce 35,000聽tonnes聽of the metal per year starting in 2023.
Trade worries
The proposed law has also driven trade concerns, as it would violate the聽United States-Mexico-Canada Agreement (USMCA), Kenneth Smith Ramos, who headed technical negotiations for the now defunct North American Free Trade Agreement聽(NAFTA), told .
Smith said declaring lithium a strategic mineral, like certain radioactive minerals, either directly or indirectly, would聽breach the terms of the USMA as the battery metal was not listed as a strategic mineral when signed.
Most of the world鈥檚 current lithium output is locked away in long term deals as downstream chemicals producers, battery makers and electric vehicles makers are聽frantically trying to secure future supply.
Mexico鈥檚 reserves of the sought-after metal could position it among the world鈥檚 top producers if extracted, data from the US Geological Survey shows.
In terms of reserves, Bolivia ranks first with 21 million tonnes, followed by Argentina (19 million tonnes) and Chile (9.8 million). Mexico holds 1.7 million tonnes of lithium reserves.