Mexico now ready to welcome private lithium miners, Energy News, ET EnergyWorld

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MEXICO CITY: Mexico’s left-wing party has abandoned plans to nationalize lithium production and is now pushing to welcome private investors to help develop the country’s potential in the metal used to make batteries, told Reuters the main lawmaker behind the proposal.

Mexico, a major producer of copper and silver, is home to large potential reserves of lithium, which is used in electric vehicle (EV) batteries. Most of it is in clay deposits that are difficult to mine, expensive and technically difficult to mine.

After touting the possibility of a public lithium monopoly late last year, Senator Alejandro Armenta, chairman of the upper house finance committee and key ally of President Andres Manuel Lopez Obrador, said rather, it would draft a bill to promote a regulated market. in the emerging sector.

“We are convinced that we need private investment and we are allies of national investors but also of foreign investors who respect us,” said Armenta, attributing his new posture to having studied the 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 the June 6 midterm elections.

The Mexican nationalist president, who favors state-centric oil and electricity markets, said in March that his government was analyzing the possibility of taking a larger stake in lithium. He did not go into details.

In recent weeks, a more business-friendly message has emerged from officials and candidates of 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 could have a 51% stake, a plan Armenta says he now also supports.

In the energy sector, private oil majors have mostly backed off joint ventures with national oil giant Pemex if the state-owned company manages operations and it was unclear whether lithium investors would respond. same way.

TRAPPED IN CLAY

Growing demand for ultralight metals fueled a global rush to secure supplies, spurred by an expected wave of new electric cars by the middle of the decade, such as General Motors and Ford.

The development of Mexico’s lithium wealth could help diversify the global sources currently concentrated in a few countries, notably Australia and Chile.

Lithium producers have sought to increase production aggressively. Leading producer Albemarle plans to double its capacity this year, and No.2 SQM plans to increase lithium carbonate volumes by more than 70% in 2021.

Lithium is produced either from brine, which is commonly found in South America, or from hard spodumene-bearing rocks, typically in Australia, with proven extraction technologies largely limited to saline evaporation ponds and to traditional ore processing.

Lithium-rich salt brines account for around three-quarters of global production, with rock mining making up the rest.

The Mexican deposits found to date, however, are mostly trapped in clay soils.

This distribution is why Fernando Alanis, former managing director of the main silver miner Penoles, is pessimistic about Mexico’s potential to become a new lithium hotspot.

“Unfortunately, the potential of Mexico does not really exist because there is no business process to remove lithium from clays,” said Alanis, who, in her role as chairman of Mexico’s mining chamber, is normally a industry leader.

Several lithium clay projects are under development elsewhere, including Lithium Americas Corp’s Nevada project. The company said it was confident it would be able to extract lithium from the clay through a process involving acid leaching.

The main Mexican prospector Bacanora Lithium, which owns four concessions in the northern state of Sonora, has said it is closest to the start of production. In 2018, it forecast production of 17,500 tonnes of lithium carbonate by 2020.

The target has been pushed back and the company’s current forecast is that production will start in 2023 and increase to 35,000 tonnes per year. If it is carried out, it is a project that would catapult Mexico to the rank of a major producer.

Global production was around 82,000 tonnes last year, according to the US Geological Survey.

Bacanora’s delays have not slowed down betting on the company, which saw its London-listed shares jump 30% in early May (May 6) after China’s Ganfeng Lithium, a major battery maker and supplier to Tesla, had proposed to take over the company.

Bacanora declined to comment on its intention to process the clay-based lithium deposit in Sonora or its take on Armenta’s new legislative proposal.

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