Q&A: ‘We won’t see a 100% Mexican lithium process for a decade’

Mining expert Aleida Azamar discusses her concerns over Mexico’s lithium nationalisation plans
<p>Aerial view of a former mine in Sonora state, Mexico, with signs of waste and tailings from copper exploitation (Image: Luis Gutierrez / Alamy)</p>

Aerial view of a former mine in Sonora state, Mexico, with signs of waste and tailings from copper exploitation (Image: Luis Gutierrez / Alamy)

Lithium has become an increasingly hot topic in Mexico. Following the discovery in 2019 of a deposit, in Bacadéhuachi, a small town in the northern state of Sonora, debates raged about who would exploit the reserves. At the time it was – erroneously, it turns out – dubbed by a mining magazine “the largest lithium deposit in the world”. Initially a joint venture between London-listed Bacanora Lithium and Chinese firm Ganfeng Lithium, the latter completed a full takeover of the project last year – just as Mexican president Andrés Manuel López Obrador’s efforts to enhance state control over the mineral gathered pace.

Having passed a law declaring the country’s lithium deposits as national property in April 2022, and establishing a state company, LitioMx, in August, the president cast further doubt on the future of private and foreign involvement in the country’s lithium industry in February, by signing a new decree ordering the energy ministry to step up its nationalisation efforts.

Lithium, the so-called “white gold”, has taken centre stage given its role as an essential component in electric vehicle batteries and other technologies needed in the global energy transition away from fossil fuels. With the recent announcement that Tesla plans to build a factory in the state of Monterrey, speculation has been growing that Mexico could become a key location in the energy transition.

But controversies surrounding the country’s lithium have been widespread and questions abound, including doubts over the speed of progress at the reserves in Sonora and the difficulty of extracting lithium from clay soils. Since the president stated in February that he would “not allow foreigners to exploit it”, there are doubts as to whether Mexico, a newcomer to the industry, has the technology and know-how to extract its lithium. Added to this are the environmental concerns of mining in areas of the country suffering from extreme drought.

Diálogo Chino recently spoke with Aleida Azamar, an economist and expert on mining in Mexico with more than ten years of experience in the field, to understand these questions. Azamar is a researcher and professor at the country’s Metropolitan Autonomous University (UAM) in Mexico City.

Aleida Azamar
Aleida Azamar discusses the socio-environmental impacts of mining on a radio programme at the Metropolitan Autonomous University in Mexico City (Image: Alejandro Juárez Gallardo)

Diálogo Chino: After the discovery of the lithium deposits in Bacadéhuachi, how do you see the situation in Mexico developing?

Aleida Azamar: There is a notable lack of clarity in institutional policy on the issue. The president has made contradictory statements. At the beginning, he showed himself to be oblivious to the issue and even described lithium extraction as more a matter for the companies, as the government did not have the money to carry out these activities. For several months, he publicly stated that nationalisation was not necessary due to the system of national concessions. This discourse changed dramatically, and since 2022 there has been much more talk about nationalising this mineral.

On the other hand, there is no clarity about the extent of the country’s lithium reserves, not even those in Bacadéhuachi. The Bacanora Lithium company believes there are 8.8 million tonnes [at Bacadéhuachi], but the US Geological Survey has suggested there may be 1.7 million tonnes [in the entire country]. This lack of precision on the subject is due to the very limited amount of financial resources available to the Mexican Geological Survey, and in turn to the fact that such a complex assessment has been attempted in such a short time frame.

I believe that for several years – perhaps a decade or more – we will not see a 100% Mexican lithium extraction process. In addition, there are few companies today that have a method for extracting lithium from clays [such as those in Sonora] that is sufficiently cost-effective to make it viable in the long term. Added to this situation is the fact that it requires highly specialised personnel, which we do not have. In the event that we were able to develop this technology for this purpose, hundreds of millions of dollars would still be needed for exploration and up to the extraction stage.

Lithium site
A proposed lithium mining site near Bacadéhuachi in Mexico’s Sonora state appears empty in 2022 (Image: Ann Deslandes / Diálogo Chino)

What role could the state-run company LitioMx play?

I would ask: for whom and why do we need a lithium company? This issue of the Mexican lithium company started when the president said that lithium is “for the nation”. The problem is that he is not planning, nor is he following, a long-term strategy.

It should be said that a company of this type is necessary – as long as they plan to develop educational and technological plans so that the population can be integrated into these production chains. In this way, it would spearhead a transformation in the country, though it would be a very long time until we would see concrete results.

But if it is just a façade to subcontract foreign specialists, it only adds to the already large existing bureaucracy that is not going to develop institutions, education or technology in the country. Moreover, we have to think that in 20 years, lithium will no longer have the same relevance – there will be alternatives. Sodium batteries and hydrogen options, for example, are already very advanced.

There can be fuel spills and cases of accidents happening because workers are not trained properly, or because of making cost savings

Given that Mexico does not have specialist technology for lithium extraction, if foreign companies carry this out, how can Mexico benefit?

It must be made clear that we do not have the value chains or capital to take advantage of this resource. Investment costs are too high and there is not even a base from which to start. Thinking about other Latin American countries that have extracted lithium – Argentina or Chile – they do not have a significant industry for car batteries, so we do not have an industry in these assemblies in Latin America. China has more experience in this area.

Roughly speaking, in order to produce a battery, there are five major stages to consider: mining, refining, chemical processing, cell assembly, battery assembly. China has the most power in all stages. And then, from stages three to five, Japan is involved. The other countries that are already extracting do not have a significant standing here – not even the United States or Australia are participating in those stages. It’s not that it’s impossible. But it is not feasible in the short term. A study by ECLAC [the UN Economic Commission for Latin America and the Caribbean] calculated that it could take Mexico 13 years to integrate into this value chain, and it would be competing in a highly specialised industry.

partially dry dam
An aerial view of low water levels in the Abelardo L Rodríguez Dam in Hermosillo in Sonora state, Mexico. The state has been heavily affected by drought, and there are concerns that lithium mining could exacerbate water shortages (Image: Luis Gutierrez / Norte Photo)

What are some of the environmental impacts of lithium extraction in general, particularly in northern Mexico where there is drought?

It is often said that the impact of lithium extraction may be less than other mining projects, but lithium extraction requires tonnes of chemicals. Lithium deposits in Mexico are in places with high water stress, such as Sonora. For every minute of lithium extraction, 600 litres of water are used – the same as two people use in a day [in Mexico City]. All processes and stages of mining require water.

Another issue in terms of environmental impact is accidents. There can be fuel spills and there are many cases of accidents happening because workers are not trained properly, or because of making cost savings and not having adequate signage.

On the social side there are also prejudices: often local people are not hired, and if they are hired it is for the most harmful processes, for the transport or the opening of the mine. The top jobs generally go to foreigners. Mining companies are leaving territories without water, and community development is not promoted; it competes with the development of the area.