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Mexico, a major copper and silver producer, is home to large
potential reserves of lithium, used in electric vehicle (EV)
batteries. Most of it is in hard-to-tap clay deposits that are
costly and technically difficult to mine. After touting the
possibility of a state-run lithium monopoly late last year, Sen.
Alejandro Armenta, chairman of the upper chamber's finance
committee and a key ally of President Andres Manuel Lopez
Obrador, said he will instead author a bill to promote a
regulated marketplace in the nascent sector. "We're convinced
that we need private investment and we're allies of domestic
investors and also foreign investors who respect us," said
Armenta, attributing his new posture to having studied
regulatory frameworks for lithium in other countries. Armenta
said a market-friendly lithium bill will be introduced in
September with the start of a new legislative session, following
June 6 mid-term elections. Mexico's nationalistic president, who
favors state-centric oil and power markets, said in March that
his government was analyzing the possibility of taking a larger
stake in lithium. He did not go into detail. In recent weeks, a
friendlier message to business has emerged from officials and
candidates from the ruling National Regeneration Movement (MORENA)
after Lopez Obrador's clashes with business elites. Economy
Minister Tatiana Clouthier told local radio last month that the
government was considering a public-private partnership to
develop lithium. She suggested the state might have a 51% stake,
a blueprint Armenta says he also now backs. In the energy
sector, private oil majors have mostly balked at joint ventures
with national oil giant Pemex if the state-run company runs
operations and it was unclear if lithium investors would react
similarly.
TRAPPED IN CLAY
Surging demand for the ultra-light metal has fueled a global
scramble to secure supplies, spurred by a planned wave of new
electric autos by mid-decade from the likes of General Motors
and Ford. Developing Mexico's lithium riches could help
diversify global sources currently concentrated in a few
countries, led by Australia and Chile. Lithium producers have
been seeking to aggressively ramp up output. Top producer
Albemarle this year eyes doubling capacity, and No. 2 SQM
expects to grow volumes of lithium carbonate by more than 70% in
2021.
Lithium is produced either from brine, commonly found in South
America, or spodumene hard rock, usually in Australia, with
proven extraction technologies largely limited to saline
evaporation ponds and traditional ore processing.
Lithium-rich saline brines account for about three-quarters of
global output, with rock mining making up the rest. Mexican
deposits found to date, however, are mostly trapped in clay
soils. That distribution is why Fernando Alanis, former chief
executive of top silver miner Peñoles, is downbeat on Mexico's
potential to become a new lithium hot spot. "Unfortunately,
Mexico's potential doesn't really exist because there isn't a
commercial process to remove lithium from clays," said Alanis,
who in his role as a president of Mexico's mining chamber is
normally an industry cheerleader.
Several lithium clay projects are under development elsewhere
including Lithium Americas Corp.’s Nevada project. The company
has said it is confident it will be able to extract lithium from
clay through a process that involves acid leaching Top Mexico
prospector Bacanora Lithium, which holds four concessions in the
northern state of Sonora, has claimed to be closest to launching
production. In 2018, it forecast output of 17,500 tonnes of
lithium carbonate by 2020. The target has been pushed back, and
the firm's current guidance is production will begin in 2023 and
ramp up to 35,000 tonnes annually. If achieved, its one project
would catapult Mexico to major producer status. Global
production stood at about 82,000 tonnes last year, according to
the U.S. Geological Survey. Bacanora's delays have not slowed
bets on the firm which saw its London-listed shares surge 30% in
early May (May 6)after China's Ganfeng Lithium, a major battery
maker and Tesla supplier, offered to take over the company.
Bacanora declined comment on how it aims to process the
clay-based lithium deposit in Sonora or its view of Armenta's
new legislative proposal.
(Reporting by David Alire Garcia; Editing by Amran Abocar and
David Gregorio)
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