RE: One for you Jimb4 Apr 2024 10:45
Xótchil Gálvez, the opposition coalition candidate in Mexico's June 2 presidential elections, warned that the legal conflict with China's Ganfeng over the cancellation of nine lithium concessions in Sonora state, which also affects British firm Cadence Minerals, will harm the country.
“The company to which they had awarded the concessions is suing Mexico. That will end badly," Gálvez said during a campaign event, adding that the country's lithium deposits are in clay and require a "very complex industrial process" to be extracted.
In August, the Mexican government notified Ganfeng, owner of the Sonora lithium project – the most advanced in the country – that its concessions were being canceled because minimum investment obligations had not been met.
The Chinese company requested an administrative review of the decision, after which it claims to have been told by the economy ministry in November that the cancellation had been ratified by the general directorate of mines (DGM).
The miner announced it “will take all measures to protect the legitimate interests of the company,” including “filing international arbitration or an annulment claim.”
In early 2022, when Ganfeng bought the project's then-owner Bacanora Lithium, the project was about to begin its development phase with an initial investment of about US$800mn. At the time of the cancellation, Ganfeng was preparing to begin construction of a plant in 18 months.
In November, Cadence Mineral, through its subsidiary REM Mexico Limited (REMML), sent a request for consultations and negotiations to the Mexican government under the Bilateral Investment Treaty between the United Kingdom and Mexico. The move came after the mining concessions were revoked by the Mexican government in order to give the State the exclusivity of lithium exploitation as part of the Sonora project.
According to Cadence, the decision affected the concessions granted to Mexilit and Minera Megalit in the Sonora project, where the company has a 30% stake through its subsidiary REMML.
Although Cadence and REMML expressed the desire to resolve the dispute amicably, the bilateral treaty with the United Kingdom stipulates the possibility of international arbitration if consultations and negotiations are not successful.
According to Gálvez, the opposition candidate, the most serious aspect of the situation with lithium is that Mexico does not have the technology to process that clay and extract lithium. “It has been [two] years since the law and we have not removed a gram of lithium because it is not just digging and extracting,” she said.
In April 2022, at the behest of President Andrés Manuel López Obrador, the country's mining law was reformed to “nationalize” lithium (although it already belonged to the nation according to the Constitution). Subsequently, the state company LitioMX was created to be put in charge of the entire lithium production and commercial chain.
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