MEXICO CITY (CN) — Mexico must open up lithium exploitation to the private sector in order to make the critical mineral cheaper, according to U.S. Assistant Secretary of State for Western Hemisphere Affairs Brian Nichols.
“I understand that, according to Mexican law, the state has exclusive rights to exploit lithium, but you all will need the private sector in order to bring it to market,” he said in an interview with the Mexican news outlet Milenio.
“We’re working together, collectively, to explore the critical minerals that we have in North America and which are going to supply the next generation of batteries,” he said. “This is a great opportunity for Mexico to form an integral part of a [regional] high-tech structure.”
Nichols added that acquiring the technologies necessary to reduce the cost of the mineral will also contribute to making the country a competitive player in the global lithium market. The State Department did not immediately respond to a request for comment.
A necessary component in rechargeable batteries for electric vehicles, cellphones and other high-tech devices, lithium has been called the “white gold of the 21st century” by industry players.
Mexican President Andrés Manuel López Obrador has nationalized lithium rights in the country. He announced Monday that the first concessions to a state-owned company would be awarded in February. The president created the nationalized LitioMX in August of last year.
Gonzalo Monroy, managing director at the energy consultancy GMEC, called this move a “major roadblock” to the development of the lithium industry in Mexico.
While the lion’s share of the world’s lithium deposits — over 51 million metric tons — are in South America, according to the U.S. Geological Survey, North America comes in second among other continents with 13.7 million metric tons: 9.1 million in the United States, 2.9 in Canada, and 1.7 in Mexico.
But just because the country has a relatively small amount of the mineral doesn’t mean it should let the opportunity to streamline this production with its North American partners pass it by.
“It makes sense for Mexico to develop its lithium industry, mostly because of the geopolitical importance, and again, location, location, location,” Monroy said. “It’s much better to have everything integrated into one single region, in this case North America, instead depending on other places like Australia or Chile, even as far away as Africa, for raw materials.”
The political roadblock is not the only hurdle Mexico will have to jump in order to properly exploit its lithium reserves.
Located in the northern state of Sonora, Mexico’s deposits are unique from those in the United States, Canada and many other parts of the world, where lithium is extracted from rocky ground or brine. Mexico’s lithium is in an area of clay limestone soil, for which the technology to extract it does not yet exist commercially, according to Jesús Carrillo, director of sustainable economy at the Mexican Institute for Competitiveness.
“In this context, it would be appropriate to have associations between the public and private sectors so that these technologies, which are not going to come from the Mexican government, can be shared and utilized in favor of the development of the country,” Carrillo said in an interview.
Lithium is a highly reactive alkali metal that does not form in veins like gold or silver that are more easily extracted. Tesla Motors filed a patent in 2020 for a method of extracting lithium from clay, and Chinese companies are also working on a method, Carrillo said, but there is still no technology to make the process commercially viable.
Both experts said it is unlikely that the current federal administration in Mexico will heed Nichols’ call to open up lithium extraction and production to the private sector.
“The chances are low, virtually zero,” Carrillo said, pointing to the ambiguous language used to write the law that nationalized the country’s lithium sector. “The government might contract out certain services, but beyond that, chances are low to nothing that it will share the risk and capital assigned to these activities with the private sector.”
Canada and the United States could take legal action to force Mexico to open up its lithium production to the private sector under the United States-Mexico-Canada Agreement (USMCA), which stipulates that a signatory country cannot nationalize an industry that was previously open to private investment.
Such actions would not be the first time López Obrador’s government has clashed with its North American counterparts on energy issues. Both the United States and Canada requested dispute settlement consultations under the USMCA over his energy policy in July 2022.
In response to the requests, López Obrador accused the other countries of trying to “loot Mexico” and played a music video during his daily morning press conference the following day, the chorus of which includes the lyric: “Oh, how scary. Look at how I’m shaking.”
Carrillo told Courthouse News at that time that the president’s energy reform that prompted the requests also violates the USMCA.
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