Mexican Lawmakers Approve Bill to Nationalize Lithium

Mexican lawmakers this week passed legislation to nationalize lithium, a mineral needed to manufacture rechargeable batteries for electric vehicles and other devices.

Mexico's Senate approved the mining reform bill by a margin of 87 to 20, with 16 abstentions, on Tuesday, one day after it was advanced by the country's lower house of Congress.

The bill recognizes lithium reserves as federal property and gives democratically accountable lawmakers rather than profit-maximizing multinational corporations control over a resource that has been dubbed "white gold" and "the new oil." President Andres Manuel Lopez Obrador, who also goes by the nickname AMLO, is expected to sign it into law as soon as this week.

Pawel Wargan of Progressive International celebrated the bill's passage by Mexico's Chamber of Deputies, asserting that "the arteries of imperial extraction are being severed before our eyes."

"Lithium belongs to Mexicans, not to transnational corporations," lawmaker Hamlet Amalguer said, according to Telesur, which reported that "150,000 hectares of land were granted to private companies for exploiting this metal during President Enrique Pena-Nieto's administration (2012-2018)."

The bill provides for the creation of a state-run enterprise that will maintain exclusive rights over lithium mining.

According to the Associated Press, "Only one lithium mine in Mexico, operated by a Chinese firm, is anywhere close to starting production. It was not clear if that mine in northern Mexico would be taken over by the government."

As Bloomberg reported:

At his morning press conference Tuesday, AMLO said Mexico will review existing contracts for the extraction of lithium, which has grown increasingly important as a component in rechargeable batteries including for electric cars. Mexico has yet to produce lithium commercially, but previous governments granted permits, including to Bacanora Lithium Plc, which was later bought by China's Ganfeng Lithium Co.

Lopez Obrador sought the measure on lithium mining after a broader proposal by his center-left Morena party to increase government control of the nation's electricity system failed Sunday to garner the two-thirds majority needed for constitutional changes.

The president described the right-wing opposition's refusal to support his initiative to overhaul the country's power system as "an act of treason against Mexico committed by a group of legislators who, instead of defending the interests of the people... became outright defenders of foreign companies."

AMLO has long championed resource sovereignty, but it remains unclear if his effort to take advantage of Mexico's abundance of lithium--instrumental to green energy storage, a crucial component of global decarbonization efforts--will include significant exemptions.

Although most of the planet's lithium is located in Bolivia, Argentina, and Chile, the United Kingdom-based Bacanora Lithium Plc identified the world's largest lithium deposit in Mexico's northern Sonora state in 2018, uncovering more than 243 million tons of the key metal.

China's Ganfeng Lithium Co., which supplies Tesla with the mineral for its electric vehicle batteries, quickly purchased all mining concessions held by Bacanora.

When Lopez Obrador's nationalization plans were made public in October, "the government scrambled to assure firms with active lithium mining permits in Mexico that they would be exempt from any new legislation," Al Jazeerareported last year. "That, in turn, was interpreted to apply to Ganfeng, because construction had started on the Bacanora Sonora Lithium deposit in February."

In December, "Mexican regulators made good on that theoretical grandfather clause and without fanfare gave the green light to Ganfeng's takeover of Bacanora's Sonora lithium mining concessions," the news outlet noted. "The official exemption illustrates that AMLO's government is willing to concede some of Mexico's natural resources to a foreign economic power. It also reveals what analysts see as a vector of tension between AMLO's quest for Mexican strategic mineral sovereignty and the much larger geopolitical race surrounding lithium."