AMLO: Mexico ready for arbitration as lithium battle heats up

Mexico’s President Andrés Manuel López Obrador (AMLO) said he is ready to take on mining companies in arbitration tribunals as he pursues plans to nationalize lithium resources.

The government wants to scrap the concessions system for lithium and bring exploration and production under state control to ensure maximum benefits for society from a forecast boom in demand for the battery metal, driven by the transition to electric vehicles and renewable energy.

But some experts warn his bill, presented to congress on September 30 and which still requires approval, could be scuppered or delayed by legal action by affected companies.

“We will go to the courts. We have to defend our national resources,” AMLO told a press conference when questioned on industry push-back to the proposals.

He also took a combative stance regarding the bill’s uncertain prospects in congress.

AMLO’s coalition group, headed by his Morena party, lacks the two-thirds majority in the lower house to force through constitutional amendments, such as the lithium reform.

“Also, I would say, so that there are no illusions over lithium, that if there is an act of treason and the plans to put lithium in the hands of the nation are not approved, we will anyway deny any request for exploitation concessions for lithium, and we have the ability to do so,” he added.

His coalition is expected to seek support from members of opposition parties such as the PRI.

LEGAL CHALLENGES

In addition to political hurdles, industry opposition could hamper AMLO’s bill.

“If the initiative is approved, there will be numerous legal challenges and international complaints, which would also be an obstacle for its implementation,” Alejandra Soto, associate director of UK-based consultancy Control Risks, told BNamericas recently.

These are likely to focus on existing concessions, which AMLO has pledged to respect, but only if holders can prove they are exploring or advancing the projects.

Only UK-based Bacanora Lithium is viewed as meeting these requirements, interior minister Adán López said earlier in October.

Bacanora and JV partner Ganfeng Lithium's US$420mn Sonora asset (pictured) is set to become Mexico's first large lithium mine, with first production on track for 2023.

AFFECTED COMPANIES?

On the international arbitration front, Mexico’s geological service lists 31 lithium projects fully or partially owned by foreign companies.

As well as four held by Bacanora, the list includes 15 assets owned by OrganiMax Nutrient Corp., now called Silver Valley Metals, which are located in Zacatecas, San Luis Potosí and Coahuila states.

One World Lithium has the Salar del Diablo asset in Baja California state, where the company confirmed in September that drilling was underway.

Three lithium and potassium projects in Zacatecas state are partly owned by Zenith Minerals, with Radius Gold reported as holding a lithium-potassium exploration-stage asset in Coahuila.

None of the companies immediately responded to requests for comment on the status of their assets or steps they are taking regarding the proposed lithium reforms.

Alien Metals is also listed as holding three projects in Zacatecas state. Yet, a PR spokesperson told BNamericas on behalf of the company that “Alien is exploring copper-gold and silver assets in Mexico. It doesn’t have any lithium assets.”

Advance Gold, which is not on the list, signed an agreement to acquire 13 lithium-potassium-boron salars in Mexico in March, along with a pilot processing plant. The company has begun exploration, releasing results of a sampling program across the properties in April and drill results from the Saldivar salar in June.

“The drilling clearly establishes the Saldivar salar as a bulk tonnage, open pit target,” CEO Allan Barry Laboucan said at the time.