U.S., Canada Want in on Mexican Lithium

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U.S., Canada Want in on Mexican Lithium
As part of the clay mining process, an excavator breaks up the topsoil to extract clay and transfer it to a truck. © Drotyk Roman

Leaders of Mexico, the United States and Canada all have called for private businesses from the latter two companies to participate in the former’s nascent and recently nationalized lithium industry.

They could be in disagreement, however, about the specific form of that participation.

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According to the leaders themselves, an agreement could be key for development of a new supply base of the white mineral, which appears important to electric vehicles, as well as other end user industries such as the grease industry.

Large deposits of lithium have been discovered in Mexico’s Sonora Desert – large enough to rank the country tenth worldwide. Commercial extraction has not occurred yet, but President Andres Manuel Lopez Obrador decreed last year that lithium could only be extracted and sold by state-owned entities.

Lithium is a key ingredient in lithium-ion batteries, including those used in electric vehicles. It is also used as a thickener in about three-quarters of the world’s greases and in other applications such as glass manufacturing, but the mineral now goes mostly to EVs, and with EV sales shooting up, concerns have arisen about whether lithium supply can keep up. As a result, a growing number of governments are taking steps to ensure access.

As demand for lithium skyrockets, prices have also jumped – to the point that some grease manufacturers are turning to alternative thickeners.

At a trade summit between the three countries this month, Canadian Prime Minister Justin Trudeau called on Mexico to allow Canadian companies access to critical materials and to segments of Mexico’s energy industry. Then, in an interview last week with Mexican new organization Milenio, U.S. Assistant Secretary of State for Western Hemisphere Affairs Brian Nichols urged Mexico to allow U.S. and Canadian companies to enter the market, contending that they can develop technologies to extract lithium from clay soils prevalent in the Sonora.

That environment differs from salt flats and hard mineral deposits that typify most lithium sources around the world. Technologies to extract lithium from clay have yet to be commercialized.

Last fall Obrador also called for American and Canadian companies to invest in Mexico’s lithium industry, but he specified that he envisions partnerships with Mexican state-owned entities and that the Mexican entities would retain majority ownership.

Canadian and U.S. officials appear to want their country companies to have more free rein. Officials have stated that the matter is being negotiated within the framework of the U.S.-Mexico-Canada free trade agreement, known as USMCA.

Companies from other countries were developing lithium projects in Mexico when Obrador nationalized the industry. In particular, at least one Chinese company had obtained several permits for a project that was nixed by Obrador’s action.

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