On Tuesday, August 23, while officials from the economics portfolios of Mexico and the United States were meeting to begin consultations on a free trade agreement, the decree establishing lithium for Mexico was published in the Union’s Official Gazette (LitioMx). ), the first government company responsible for the exploration, exploitation and production of listed minerals.
The government’s choice of this very moment to publish the decree did not go unnoticed by Jose Maria Lujambio, partner at Cacho, Cavazos & Newton, where he runs the energy division. “It must have been no coincidence that the decree was announced on the day TMEC’s energy advisory began, just to put the issue on the table,” says the attorney over the phone from Austin, Texas, “until it is removed or it will distract from the topic.” Consultations with a prominent nationalist and state scale.”
President Andres Manuel Lopez Obrador scored a victory in April, when Congress approved a mining law reform that empowered the state as the only country that can explore, exploit and produce lithium. Pero no ha sido hasta más recientemente y una vez formalizada la disputa con EE UU en torno al sector energético, que el Ejecutivo ha puesto el foco en la politica de litio en el país, en donde may se ubica una de las potencials the scientist. Between the small version of the decree and confusing messages from the executive branch, the country still lacks a clear policy when it comes to lithium, analysts agree.
On Wednesday, Sonora’s governor, Alfonso Durazo, announced that he would be “the person in charge of the company” and on Wednesday, López Obrador revealed that Pablo Tade, the son of one of his political allies, would be the director of LitioMx. says Rigoberto Garcia, an academic researcher in the Department of Urban and Environmental Studies at El Colegio de la Frontera Norte (Coleif), based in Nogales, Sonora. The specialist said: “The fact that Jorge Tade’s son was appointed the next day made me think they weren’t very clear about what they were doing.”
In the small version of the August 23 decree, the federal government left the door open for private initiative, saying that LitioMx “may be associated with other public and private institutions.” The use of the word “institutions” is key, Lugambio says. The lawyer says: “It does not say companies or organizations or any other expression, it says institutions. The truth is that it is a rather vague expression, and it is not clear whether what they really want is an invitation to the private sector to participate or they leave that door open when needed” .
The mine at Bacadéhuachi, in Sonora, is the only mine in Mexico known with certainty to have economic potential and only one company has the privilege to exploit this resource, Bacanora Lithium. Bacanora was originally a consortium between an English company and the Chinese company Ganfeng Lithium. However, Ganfeng announced in May that it would acquire all shares in the company. The concession to exploit the Sonora mine was granted during the previous administration and López Obrador made no statements about how Bacanora would be able to operate if only the state could produce lithium.
In terms of energy, we must ally ourselves fully with our natural partners, who are our geographical neighbours, and not play with China. I think they are playing somewhat like the nationalist card and the anti-US card, and they are manipulating China on these issues,” says Lugambio.
The Mexican state does not have the knowledge or experience to be able to exploit and manage the entire lithium value chain, Garcia points out, which is why it has had to hook up with private parties. The government also does not have the resources to fully study the presence of lithium throughout the national territory. “We know there are a little over 80 points across the national territory, there are semblances of lithium, but we don’t know how much lithium,” and to figure out how much lithium, to get a little more accurate knowledge of the reserves, it would be for billions of dollars in investments that the government doesn’t have.”
At a press conference on Wednesday, Lopez Obrador himself acknowledged the lack of resources, saying the investment scheme should be “public-private”. “It won’t be enough for us to just be public, it takes a lot of investment,” the president said.
“To open that little window so that there is some private participation is due to the need to gather resources to be able to operate,” says Lugambio. “The budget itself is very tight, and programs of all kinds in the government have been reduced to meet the president’s budget priorities,” he adds. To see how important it is for the government to deliver on the lithium promise, it will be necessary to find out how many resources are allocated to LitioMx in the federal spending bill, which will be sent to Congress on September 8.
Lugambio and Garcia agree that a lack of clarity drives private capital away. Additionally, Lujambio points out, if LitioMx decides to associate with a private company to form a consortium or joint project, the control of said Federation shall be subject to the control of the State, for this is what is dictated by law. “If the private company does not have decision-making power, it is unlikely to be interested in participating,” says the attorney. “The open door is ambiguous and therefore does not provide absolute certainty about what is required.”
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