AMLO nationalizes lithium and declares there are plans to review existing contracts


Mexico’s Congress on Tuesday passed a bill to nationalize lithium, tightening control of strategic mineral resources, as President Andres Manuel Lopez Obrador vowed to review all contracts to exploit the metal.

By a large majority, the Mexican Senate passed the lithium amendment to the country’s mining law. A day earlier, the lower house spent just a few hours debating and then approving the bill that Lopez Obrador submitted on Sunday, April 17.

The legislation, which was approved in general terms by the Senate before lawmakers began working through reservations, prohibits private participation in the lithium market.

Celebrating the lower house vote earlier, Lopez Obrador said all contracts in the lithium sector would be reviewed, setting the scene for potential clashes with investors. Mexico does not yet have any commercial lithium production.

Close to a dozen foreign companies currently hold contracts to explore potential lithium deposits. The largest is a site in the northern state of Sonora run by Bacanora Lithium, which is controlled by the Chinese firm Ganfeng Lithium Co.

Lopez Obrador also said the government was checking whether “a Chinese company” in Sonora – an apparent reference to Ganfeng – had complied with requirements to mine, adding that “those contracts specifically need to be reviewed.”

The bill also includes a clause that would allow the state to take over “other minerals declared strategic” by Mexico.

“Contracts for other minerals won’t be suspended. Those are still valid,” Lopez Obrador said. “It’s for lithium, not silver, gold, copper.”

Critics of the bill say Mexico already controls lithium production under the constitution and that the reform could scare off investment in the metal essential for batteries.

Others say Lopez Obrador is testing the limits of the law after his constitutional reform to tighten state control of the power market was defeated in Congress on Sunday.

“I’m afraid that all this was calculated,” former Mexican Supreme Court justice Jose Ramon Cossio wrote in the Mexican newspaper El Universal, arguing that the mining law could end up triggering another constitutional dispute.

Source: Forbes Mexico

Mexico Daily Post