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LatinNews Daily - 24 August 2022

MEXICO: State-run lithium company is born

On 23 August, Mexico’s President Andrés Manuel López Obrador issued a decree in the official gazette (DOF) to create a state-run lithium company.

Analysis:

The decree states that Litio para México, or LitioMx, will sit under the energy ministry (Sener) and function as a decentralised public agency with technical, operational and management autonomy. The creation of the body represents another step towards President Andrés Manuel López Obrador’s plan to bring the exploration and, ultimately, production of lithium under state control and out of the hands of foreign companies. However, it remains uncertain whether the state-run company will have the technology or expertise to produce lithium, especially given much of Mexico’s reserves are located in hard-to-extract clay deposits.

  • The decree states that the purpose of LitioMx is “the exploration, exploitation, benefit and use of lithium, located in Mexican territory, as well as the administration and control of the economic value chains of said mineral”.
  • To comply with these objectives, the company will elaborate strategic programmes; develop technology required for the lithium industry; locate lithium reserves; promote the sustainable use of lithium for the energy transition; and manage the production and distribution of products derived from lithium.
  • For this last action, the decree states that LitioMx “may associate with other public and private institutions”, indicating that the private sector may still be involved in Mexico’s lithium industry.
  • The company’s board of directors will be made up of Sener head, Norma Rocío Nahle García, who will preside over it; finance minister, Rogelio Ramírez de la O; economy minister, Tatiana Clouthier; interior minister, Adán Augusto López; and environment minister, María Luisa Albores González.
  • The decree follows another issued on 20 April which amended the mining law to declare lithium patrimony of the nation and make the Mexican State solely responsible for its exploration, extraction and use.
  • This first decree followed the lower chamber’s rejection of López Obrador’s electricity sector reform - which included the nationalisation of lithium - on 17 April. Together with the creation of LitioMx, this demonstrates the president’s determination to pursue his nationalist energy policy, despite objection domestically and abroad.
  • According to the US Geological Survey, Mexico has the ninth-largest identified lithium reserves in the world, with 1.7m tonnes. However, there is currently no commercial lithium production in Mexico.

Looking Ahead: The decree enters into force today (24 August). The company is set to start operations within six months.

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