Mexico bets on lithium monopoly, “gold” in the face of electric car boom

RIO DE JANEIRO, BRAZIL – Mexico plans to monopolize the exploitation of lithium, indispensable for electric car batteries and the development of new technologies, according to a constitutional reform project of leftist President Andrés Manuel López Obrador.

The initiative sent to the Chamber of Deputies also proposes reserving the majority participation in the electricity sector, López Obrador announced this Friday in his usual press conference.

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If the amendment is approved, the exploitation of minerals “considered strategic”, such as lithium, will not be concessioned, said Interior Minister Adán López at the same conference.

“It will be the State that will intervene in the exploration and production of these minerals,” he indicated.

López Obrador detailed that there are currently eight concessions granted in the country for lithium exploration that will remain in force “as long as (the companies) accredit that they have started” this process and that “they are in the terms foreseen to start production”.

Lithium is mainly extracted in South America and Australia, and China dominates the supply chain.

Mexico has lithium deposits mainly in the northern state of Sonora, where drug traffickers and other organized crime gangs operate.

The Faraday Institute, the UK’s electric battery research center, spoke of a new “gold rush” for metals such as lithium, cobalt, and nickel in late December.

Although Mexico has not set a date for banning new gasoline and diesel vehicles, there are assemblers of major car brands such as Ford, General Motors, Kia, Audi, and BMW operating in the country.

NO NATIONALIZATION

The constitutional reform also assures the state-owned Federal Electricity Commission (CFE) 54% of the sector’s market, compared to 46% of the private sector.

The objective is to achieve “true competition”, stated the President, specifying that the initiative modifies three articles to control energy prices and thus protect the “popular economy”.

“This means strengthening public companies such as the Federal Electricity Commission because the previous policy was to strengthen private companies”, he added about his predecessors, whom he accuses of having applied neoliberal policies that deepened corruption and inequality in Mexico.

However, he assured that the reform does not seek to “nationalize or nationalize” but “give its place” to the CFE.

The reform also contemplates the disappearance of energy regulatory agencies such as the National Hydrocarbons Commission and the Energy Regulatory Commission.

At the beginning of last March, Congress approved an electricity law promoted by López Obrador that prioritized the CFE in the generation of energy, regardless of cost or technology.

His detractors pointed out that the state-owned company was being strengthened at the expense of producing more expensive and polluting energy.

The law was suspended indefinitely by a judge specialized in the economic competition after several companies filed injunctions, and López Obrador asked the judiciary to investigate the magistrate.

The President has strongly criticized the participation of private initiative in the energy sector, particularly reforms approved during the government of his predecessor, Enrique Peña Nieto (2021-2018).

With the new composition of the Chamber of Deputies, Morena, the ruling party, does not have a qualified majority. That is, the sufficient number of legislators to change the Constitution on its own. Therefore, it will have to negotiate the reform with other political forces.