:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/YESTKTLMOFDS3C37N2NDSSEJZU.jpg "Pablo Taddei Arriola, CEO of LitioMx, during an interview with Bloomberg Línea in Mexico City. (Photographer: Daniel Hernández).")
Mexico City — Litio para México (LitioMx), the company created by the government of President Andrés Manuel López Obrador to manage the exploitation and trade of the country’s lithium reserves, is negotiating with companies throughout the value chain to establish public-private partnerships, according to the company’s CEO Pablo Taddei.
Negotiations are also currently underway with companies that already have concessions in the country, with the aim of forming a common front, Taddei explained in an exclusive interview with Bloomberg Línea.
A reform to the mining law in 2022 puts the Mexican government in charge of exploring, extracting, producing and commercializing lithium, however the reform is not retroactive, so companies that were awarded a concession prior to the change would not be affected, according to Taddei, and LitioMX is negotiating to add them to the effort to build the business.
The mineral has become the most sought-after by governments and companies for the electric vehicle industries as its use as a component in the manufacture of batteries.
Taddei, who holds a PhD in environmental health from Harvard University, explains that the country’s window of opportunity is reduced to three or four decades in which the demand for lithium will exceed production, compared to that of oil, which lasted 200 years.
“In a first stage, a partnership will most likely be necessary. Also in the battery manufacturing part,” he said.
The lithium business will be fundamental for Mexico. The Treasury estimates that the nationalization of lithium and the attraction of the value chain in Sonora, the state with the largest reserves, has a potential value of $600 billion, more than a third of the Gross Domestic Product (GDP) in 2022.
The Treasury forecasts that in a medium-term scenario lithium will contribute an additional 0.3 percentage points to GDP, according to the General Economic Policy Criteria 2023.
LitioMx’s partnerships with the private sector will be based on the stewardship of the Mexican state to prevent profits from lithium from going to other countries, he explained, as happened with the exploitation of copper, in addition to guaranteeing technology transfer and the hiring of personnel in the region where there is a lithium project.
Taddei said that in some cases, LitioMx “can go it alone,” but in others he recognizes that the company lacks the capacity and technology, as in the exploitation of lithium clay deposits.
“That is the most complicated. In that process we are definitely going in for public-private partnership”.
When asked about the future of the concession of British firm Bacanora Lithium with Chinese investment from Ganfeng, Taddei said LitioMx’s conversations are not limited to a single company, but are taking place with people or companies with concessions throughout the country.
“We are in negotiations to see if they develop lithium together, and whether we reach an agreement so that these concessions are handed over, returned to LitioMx, or they can continue. They have the right to that concession,” he said.
Taddei declined to name the companies with which LitioMx is negotiating, but mentioned that it has spoken with companies involved across the supply chain, from exploratory companies to those with patents for the lithium separation process.
LitioMx has also approached companies in the United States and Canada that have shown interest in partnering with the state-owned company, as well as companies in Latin America. Taddei however said he preferred not to say if electric car manufacturer Tesla, which plans to install a factory in Mexico, would be part of these conversations.
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:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/GF7WEAXYPFGULGK3YBENC4RTCE.jpg "Pablo Taddei Arriola, director general of Mexico's state-owned LitioMx during a conversation with Bloomberg Línea in Mexico City.")
Plan Sonora
Litio Mx is part of a more ambitious project by the Mexican government in the north of the country, known as Plan Sonora, which aims to export electricity to the United States, take advantage of possible lithium deposits and create a green industry in the region.
The origin of the new company goes back to President Andrés Manuel López Obrador’s reform of the country’s mining law to nationalize lithium in April 2022, following a presidential decree in August of the same year.
Taddei says the first outlines of collaboration with AMLO’s government in what is now known as Plan Sonora began back in 2018, when the president outlined his energy policy. In 2021, Taddei served as an advisor on the 1,000 MW solar plant in Puerto Peñasco, in Sonora state, the largest in Latin America.
“Plan Sonora is a project of the president, with a great vision in which he talks about the lithium part in the state,” Taddei said.
However, Sonora would not be the only state involved in the lithium project.
“We have other potential sites in the north and south of the country,” Taddei said.
A document from the Economy Ministry seen by Bloomberg Línea also lists potential lithium deposits in the states of San Luis Potosi, Zacatecas and Baja California.
Questioned about the potential contamination caused by lithium mining and its water use, Taddei said he will meet with the National Water Commission and the Mexican Institute of Water Technology on February 10 about three pre-project cases and the amount of water the company can extract per aquifer.
“The first thing is to see that, for what the project requires, the aquifer can withstand it (...) What must be very clear is that water for communities will be prioritized, the natural reserves are outside the exploration areas. Communities and Indigenous peoples must be respected and consultations must be carried out,” he added.
Resources, reserves and lithium contracts
The US Geological Survey estimates that Mexico’s lithium reserves are around 1.7 million tons.
Taddei says that exploratory mapping has been carried out, and “a lot of outbreaks and spots” have emerged, but declined to give a figure because the company is still in the evaluation stage.
“If I were a little less serious, I would throw a number at you,” he said.
Reserves, he clarified, vary depending on the market and financially, environmentally and legally exploitable resources, as is the case with oil reserves.
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Taddei said Mexico has the elements to be a world power in the industry terms of the amount of lithium resources, but unlike the lithium triangle formed by Argentina, Bolivia and Chile, where these countries have lithium in salt flats - from which it is easier to extract the mineral - Mexico needs more complex technology that requires “a lot of water and energy”.
With technologies such as direct lithium extraction, projects may be more feasible in the short term, he said.
“The high prices of lithium, which are exorbitant today, will be leveling off between $25,000, $30,000 and $40,000 per ton in the coming decades, allowing projects that were not attractive before to become so”.
He said that President López Obrador will hand out assignments, as is the case with Pemex, and not concessions.
He added that exploration is almost finished, and the first lithium projects will start before the end of López Obrador’s six-year term in 2024.
“While we are not going to see lithium processed or extracted [during the current administration], we are going to start projects,” he said.
He said more announcements regarding the nascent industry will be made on February 17, when he and President López Obrador will visit Sonora.
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