The nationalization of lithium runs the risk of remaining only a promise. The reform to the Mining Law , approved in record time in the legislature, has kindled the hope of a new bonanza –like the one brought by oil a few years ago–, but the variables to ensure that it can become a reality are not yet tangible: the data to affirm that Mexico is a power in the mineral are not yet fully confirmed and excessive optimism could raise expectations to the point that they can not be met.
The change in the legislature has been drawn from the political discourse on a par with the oil expropriation or the nationalization of the electricity industry. Analysts do not see it as a coincidence that it was approved just one day after the electricity reform was rejected . Opinions are divided between those who believe that the stewardship of the State is important and include a new mining model and those who assure that the government does not have the resources and the mineral cannot be exploited. The road ahead is still long, what is known about lithium, at least in the country, is still little, and Mexico is just taking the first steps.
The first great expectation arose around the lithium reserve located in Bacadéhuachi, in Sonora. Four years ago, in 2018, the English company Bacanora Lithium – which took over the concession more than a decade ago – made an announcement that ignited the first part of the optimism: the discovery of a mega lithium deposit, which, with reserves of around of 243 million tons –as announced at the time–, would lead the country to have the largest deposit of the mineral in the world.
The announcement placed the discovery above a previous one at Hacker Pass, Nevada, with proven reserves of 179 million tons. But the information has been distorted, says Luca Ferrari, a researcher at the UNAM Center for Geosciences, and the 243 million tons are a combination of clay, lithium and other minerals. Only between 4 and 5 million tons of mineral could be extracted from the Bacadéhuachi deposit, says the academic and the company’s own information.
This amount does not detract from the potentially commercial nature of the reserve, but it does require rethinking the expectation that has been built up regarding the mineral, explains Ferrari. “You are being too optimistic,” he says over the phone.
The importance of the deposit is not in doubt and its value was confirmed when the Chinese company Ganfeng – the largest producer of lithium batteries in the world – acquired the entire deposit in the border state. But production has not formally started, and the company has delayed the start until early 2024, according to its latest estimates. Almost six years would pass from the announcement of the discovery to the first production of lithium. This should put in perspective, say the interviewees, the time it could take for the Mexican State to exploit the mineral, since it has prohibited the granting of lithium concessions and the participation – at least for now – of private capital.
How much lithium is there in Mexico?
Mexico is still in one of the early stages. Until before the announcement of the English Bacanora, the mineral, at least in the country, was out of the collective conversation and did not figure in the political discussion. “It was not a strategic element, therefore it had not been explored and the reserves had not been certified,” says Ferrari.
Some rankings place the country as one of the main holders of lithium. The United States Geological Survey places Mexico in the 10th place of the countries with the largest reserves. The British Geological Survey also places it as one of the countries with the largest amount of lithium. But it’s all a matter of perspective, say the interviewees. The first organization calculates that the country has 1.7 million tons of reserves, less than 10% of what Bolivia or Argentina have, who lead the lists, with 21 and 19 million tons of mineral reserves, respectively.
Until now, international organizations and private companies have become the main source of information to assert that Mexico can become a power in the material. “There is no official data (from Mexico) on lithium reserves in the country, the only deposit in which there is already more advanced work is Bacadéhuachi,” says Rigoberto Garcia Ochoa, an academic from the Colegio de la Frontera Norte . “In reality there is no data that allows us to affirm that we are a power and make enthusiastic plans that place it as the oil of the 21st century or white gold.” Mexican institutions do not yet have studies and calculations related to the reserves that exist in the territory.
But Violeta Núñez, an academic from the Autonomous Metropolitan University (UAM), says that the studies are already underway and that these could only increase the amount of lithium that the country is known to already have. “We are number 10, but without having started a prospecting process in the country,” he explains. “We are not comparable (with Bolivia or Argentina ), but we are an important nation, in the sense that the prospecting process has not yet started and we are already there.”
Mexico is just beginning with the process that the great producing powers like China or Australia began years ago. The first step is prospecting, says the researcher, which consists of defining in which parts of the country there would be reserves and the type of deposit in which they are found: clay or brines. The Mexican Geological Service has already begun this task: in this year’s expenditure budget, an item has been allocated for the geological study of 82 localities in the country with the presence of lithium and the definition of areas with sufficient quantities to be considered economically viable. . Nuñez assures that another 73 potential locations have been added to this study.
At the same time, another deadline is running: 90 days from the entry into force of the reform to define how the decentralized body will be formed that will lead the guiding axis of mineral exploitation. Little is known about how it will operate and the budget. The president has compared it to the state-owned CFE and the document approved in congress ensures that it will be in charge of the entire mineral value chain.
With this, Mexico joins the wave of nationalization of resources in some Latin American countries: Bolivia declared lithium a strategic resource controlled by the State a few years ago, and Chile plans to establish a state-owned lithium company.
But these countries, which together with Argentina make up the region known as the Lithium Triangle – which concentrates more than 80% of world reserves – have a condition that the country does not. Its ore reserves are found in brines – bodies of water with high concentrations of salt –, a type of reserve in which there is already more experience and technology worldwide and in which the exploitation price is lower. Mexico has most of its reserves –as in Sonora– in clay and with some traces of brine in Zacatecas or San Luis Potosí.
How easy is it to extract lithium than Mexico?
The exploitation of lithium in clay has been little explored and its technical complexity, say a fraction of the academics, could make the activity less profitable. “It is a deposit that is not normally economical (…). What we have in Sonora and in a large part of Mexico is lithium mixed with clay and until now they have not been commercially exploited,” says Ferrari. Production in this type of reservoir requires an additional process to bring the lithium to a state similar to that found in brines and then to reach 99.9% purity lithium carbonate.
The complexity of the extraction, the academics say, may put the viability of the federal project at risk: a large economic cost without the help of private parties could stop or delay production or an advance in technology could give way to other sources for manufacturing. of batteries displacing lithium. Anyway, they explain, the knowledge of the mineral is still little and for now most of the conclusions can be speculations.
Production in most of the national territory would also involve a technique that until now has remained somewhat far from the conversation: open pit mining, the type of exploitation that takes place on the ground when the deposits are found from the surface and in deeper parts of the area. In the speech, this type of exploitation could seem contrary to the actions of the federal government, which has put a pause during the administration of any type of mining concession.
But Nuñez, the UAM academic, defends that the key to legislative change lies there: “The big mining industry says ‘we are afraid that lithium will stay buried,’ because we are afraid that the big industry will arrive and destroy the territories where lithium is. They are different fears, they are afraid that the lithium will remain buried and we are afraid that the history of devastation of the territories will continue repeating itself”.
