Mexico is seeking to reap maximum rewards from its emerging lithium industry by attracting investment across all levels of the production chain.
With Bacanora Lithium’s US$420mn Sonora project set to put Mexico on the lithium mining map, the country plans to carve out a broader role as a supplier to the renewable energy and lithium battery markets, mining undersecretary Francisco Quiroga said.
“Mining is the first link to construct a business agenda based on the production chains of mining states,” Quiroga said in a release following an event in Mexico City.
The country has huge potential as a supplier to the renewable energy market, and this role could deliver major environmental, economic and social benefits to Mexico and mining communities, the undersecretary added.
As well as its emerging lithium mining industry, Mexico is the world’s biggest producer of silver, a key component in solar panels.
“Without mining there is no energy transition,” he said.
INTERNATIONAL INTEREST
Mexico’s government has already attracted interest in potential investment opportunities in lithium from international players.
Quiroga told Reuters he has already met with investors from Canada, Germany, Japan, the UK and the US to discuss opportunities.
“What we’re offering is more than the promotion of mining – but instead mining [complemented] by activities along the entire production chain, including manufacturing – and there’s been a lot of interest,” the undersecretary was quoted as saying.
THE OPPORTUNITY
Sonora is by far the most advanced Mexican lithium project, and Bacanora and strategic partner Ganfeng Lithium are seeking to start production in 2022.
Output is expected at 17,500t/y battery-grade lithium carbonate, rising to 35,000t/y in a US$380mn phase 2 expansion.
Ganfeng is currently undertaking a technical review of the project, which ranks among the world’s largest clay lithium deposits, with measured and indicated resources containing 5.0Mt lithium carbonate equivalent with an additional 3.7Mt in the inferred category.
The US Geological Survey estimates global lithium reserves totaled around 62Mt in 2018.
OTHER PROJECTS
In addition to Sonora and the Sonora phase 2 projects, BNamericas has 18 Mexican lithium assets listed in its project database.
The majority (12) are suspended early-stage projects in Coahuila, San Luis Potosí and Zacatecas states.
Of the six active projects, OrganiMax Nutrient’s La Salada, Santa Clara and Caliguey salars are in the advanced exploration stage.
The company last year announced maiden resource estimates for the Zacatecas state assets, with a combined 120Mt in the inferred category at grades of 4.6% potassium and 380 parts per million lithium.
One World Lithium is also drilling at its Salar del Diablo project in Baja California Sur state.
SUPPORT FOR MINING
Quiroga said the government has cleared 95% of a backlog of mining applications carried over from the previous administration.
He also said the government has renewed Mexico’s mining promotion trust, a fund which supports project development.
OUTLOOK
Quiroga has drawn attention to Mexico’s opportunity ahead of a forecast lithium boom, driven primarily by demand for electric vehicle batteries.
As well as its lithium assets and established mining industry, Mexico hosts a large automotive sector, which could see the country become an important electric vehicle manufacturer, environment secretary Víctor Toledo said previously.
But Quiroga warned of operational, commercial and financial challenges in building on this goal, without giving specifics.
Several headwinds are evident.
Firstly, price volatility and uncertainty over future supply and demand are impacting investments, with lithium carbonate prices falling more than 30% last year.
Secondly, Mexico faces strong competition – particularly from lithium front-runners, Chile and Argentina.
Chile in particular has had a big head-start. The country’s state-run development agency, Corfo, announced a scheme to secure cut-price lithium from Chilean producers in March 2019, with the aim of establishing the country as a global leader in the lithium production chain.
