Mexico Nationalizes Lithium Industry


Mexico’s government nationalized the country’s nascent lithium industry this week as legislators approved President Andrés Manuel López Obrado’s bid to take control of mining the mineral.

The move raises questions about prospects for Mexico to become a major supplier of the chemical, which is drawing growing global interest because of its use in electric vehicles.

Get alerts when new Sustainability Blog articles are available.


A populist elected in 2018, Lopez Obrador has pushed to nationalize a number of business sectors, reversing decades of Mexican movement toward privatization. The Chamber of Deputies and the Senate – the two houses of the country’s national legislature – adopted on Monday and Tuesday, respectively, the president’s proposal to declare lithium a resource of national interest and to set up a government company to mine and process it.

Those votes came after a Sunday vote that defeated a separate Lopez Obrador proposal to extend the government’s sway over the energy sector. The latter proposal required support from two-thirds of legislators, while the one that concerned lithium needed only a majority.

Lithium prices, which had fallen by about half from 2018 to the end of 2020, have now quintupled over the past year, mostly because of increasing demand for use in the batteries that power EVs. EV sales are projected to keep rising, which would cause lithium demand to do the same, so suppliers around the world are rushing to increase output.

The grease industry uses smaller but still significant volumes of lithium for thickening agents used in the manufacture of grease. The run-up in lithium prices has increased costs for grease manufacturers and pushed suppliers to begin shifting toward alternative thickeners.

There is still debate about Mexico’s prospects for becoming a major contributor. To date, Mexico has produced negligible amounts of the mineral, which is now dubbed white gold, but very large deposits discovered in the northwestern state of Sonora will enable the country to join Chile and Bolivia as three of the world’s four largest sources.

Skeptics say the lithium discovered in Sonora is located in clay and that industry has not yet found a cost-effective way of extracting the mineral from such a location. The deposits have certainly attracted investor interest. Bacanora Lithium has the most advanced project – an extraction and processing plan designed to supply 35,000 metric tons per year of battery-grade lithium beginning in 2023. The company has been bought out by Ganfeng Lithium Co., a large supplier in China, which is rushing to secure enough lithium resources to accommodate its burgeoning EV industry.

The current administration in Mexico City has sent conflicting messages about what nationalization would mean for projects such as Bacanora. At least one minister has said existing license holders would be permitted to proceed with their projects, but Lopez Obrador has claimed that Bacanora’s licenses have “problems,” that he planned to investigate the granting of them and that the private company will not be allowed to proceed.

Related Topics

Additive Components    Additives    Grease Thickeners    Lithium    Market Topics    Mexico    North America    Region