Senate has approved the mining reform proposed by Mexican President Andrés Manuel López Obrador just two days after the proposal. The law now gives the country exclusive rights over the well-known battery metal lithium. In simple terms, this means that Mexico has nationalized its lithium industry!

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Lithium is now elevated to the category of “strategic mineral,” and the exploration, exploitation, and use of lithium are set to be exclusive to Mexico. The bill includes a clause that allows the country to take charge of “other minerals declared strategic” by the Mexican government. The next action is the 90 days given to create a decentralized body to deal with all lithium matters.

This is a huge win for López Obrador as, since 2018, he has fought to flip the switch on resource reforms. His main goal was to eliminate the past reforms which included opening up the oil and electricity sectors of Mexico to private investment groups.

López Obrador said that his administration will review in detail all the lithium contracts. This gives some troubling doubt to companies like China’s Genfeng Lithium which owns the giant Sonora project. The project is slated to produce nearly 35,000 tonnes of lithium per year starting in 2023. Another piece of shade is that the law can potentially bring trade tensions with the United States and Canada. There are claims that the new law violates the United States-Mexico-Canada Agreement (USMCA).

A former head of technical negotiations for the North American Free Trade Agreement (which no longer exists) told some that declaring lithium a strategic metal is an issue as lithium is not designated as such when three nations signed the agreement.

There is good news from the Mexican Association of Mining Engineers, Metallurgists, and Geologists alike who claim that “clays containing lithium have been located,” and “to the best of our knowledge, no country has produced and commercialized lithium from clays.”

Long-term deals lock in most of the world’s current lithium output. The long-term deals are held by downstream chemical producers, battery makers, and electric vehicle makers who are all also trying to secure future supplies.

Mexico now is in the top 10 lithium producers according to the United States Geological Survey.

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