After more than 10 years of exploration work and developing a process to benefit lithium from clays, the project led by the Chinese company Gangfeng since 2022 is on a tightrope and to fill its place the Government of Mexico created the parastatal LitioMx, which, one year after its foundation, does not see a future, according to specialists, who cite several reasons.
In 2021, Gangfeng Lithium invested $370 million to obtain 28.8% of the corporate capital of Bacanora Lithium and 22.5% of the Bacadehuachi project, where it is estimated that there are 8 million tons of mineral reserves.
This agreement gave Gangfeng the right to acquire 50% of the 17,500 tons of lithium carbonate that will be produced during phase 1 of the project, estimated to begin in 2023, and 75% of the 35,000 tons that will be produced. in phase 2, according to the company’s own page.
Subsequently, at the end of 2022, the Chinese giant paid an additional $264 million to keep 100% of the shares of the Anglo-Canadian company, despite the fact that there was already a rumor that the Mexican government was planning to nationalize the mining product.
In contrast, LitioMx does not have a sufficient budget, it still lacks a proven system for the benefit of the mineral, in the last period metal prices have fallen and on the table is a mining reform promoted by President Andrés Manuel López Obrador that aims to prohibit open pit mining, not to mention that in a year it has not produced a single gram of the so-called white gold.
Meager budget
In the 2024 Federation Expenditure Budget Project, presented by the Ministry of Finance and Public Credit, there is an amount of 9 million 769 thousand 397 pesos assigned to the LitioMx operation.
There are less than 10 million pesos so that the decentralized public body can fulfill its task of guiding the exploration, exploitation, benefit and use of lithium located in national territory (1.7 million tons, according to calculations from the United States Geological System), as well as the administration and control of the economic value chains of said mineral.
According to the General Economic Policy Criteria of 2023, it is estimated that the entire lithium value chain, which goes from extraction to the production of batteries and electric cars, has a potential value of 12 trillion pesos, which It is equivalent to more than a third of the National Gross Domestic Product (GDP).
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For this reason, specialist Alberto López Santoyo, spokesperson for the Sonora Mining Association, points out that such a reduced budget may barely be enough to cover the payroll of the parastatal company and nothing more.
Without job or benefit
In the case of LitioMx there is an office assigned by President López Obrador to take charge of the promising future of the industry associated with this mineral, which is the main component of lithium ion batteries (BIL).
However, the parastatal lacks a beneficiation process to separate lithium from clay as found in Mexican soil. The producers of this precious mineral process it from salts, this is what happens in Bolivia and Australia.
In Mexico, the company Bacanora Lithium, led by Erick Carter, developed the pilot plant technology to benefit lithium from clay, with favorable results, but without implementing the process at an industrial level.
Bacanora Lithium and its technological processes are property of the Chinese company Gangfeng, to which the federal government canceled nine mining concessions, including those in the Bacadehuachi region, where it is estimated that there is the largest lithium reserve in Mexico.
Price crash
To the above, we must add that the fall in the price of lithium in the world will increase in 2024 and in projection to 2025, according to the latest report from the Department of Industry and Science of Australia, the largest producer of this mineral in the world. .
The red numbers are due to increased supply of the battery metal, subdued Chinese demand and a lackluster U.S. electric vehicle market, according to the document.
In 2024, prices are estimated at $13,377 per ton for lithium carbonate; 14,263 dollars per ton for lithium hydroxide and 1,250 dollars per ton for spodumene, also called concentrated lithium. And the mineral that promises the energy transition has had key variations.
Data from the Australian government, in 2022, spot prices for concentrated mineral, also called spodumene, averaged $4,364 per ton. The spot price of lithium hydroxide, which is a refined lithium product, averaged $67,279 per ton in 2022.
The high prices in 2021 and 2022 encouraged greater investment in lithium production, which resulted in a growth in supply, which exceeded demand, leading to a 71% drop in the price of the metal in spodumene and a 78.80% drop in lithium production. for lithium hydroxide in 2024.
Shot in the foot?
On February 5, 2024, on the occasion of the anniversary of the Political Constitution of the United Mexican States, President Andrés Manuel López Obrador presented an initiative with a Draft Decree that contemplates various reforms, among which the prohibition of pit mining stands out. open.
According to this initiative, the aim is to modify article 27 of the Constitution in order to protect the environment and public health. It is proposed to prohibit both the granting of concessions and the activities of exploration, exploitation, benefit, use or exploitation of minerals, metals or metalloids in the open pit, establishing sanctions for those who violate these provisions.
In this sense, Alberto López Santoyo, spokesperson for the Sonora Mines Association, highlighted that to date only one Lithium deposit has economic viability in Mexico (overcoming technical issues that are still pending), that of Bacadehuachi, in Gangfeng.
However, the exploitation of this deposit would be with open pit mining and it turns out that, on the other hand, the same president who created LitioMx is proposing changes in the mining law so that open pit mining is prohibited in Mexican territory.
In short: If this initiative is approved, LitioMx has no future, just one year after its creation. Alberto López Santoyo, geophysics engineer and editor of Mundo Minero magazine.
They refuse to give protection to a lithium mining company due to cancellation of concession
The federal Justice refused to grant an injunction promoted by Minera Sonora Borax (MSB), a subsidiary of Bacanora Lithium, owned by the Chinese company Gangfeng Lithium.
The company filed the amparo before the Eleventh District Court, located in Hermosillo, with the objective of reversing the cancellation of the mining concession initiated by the General Directorate of Mining of the federal Ministry of Economy in September 2023.
According to file number 1496/2023 filed in the Eleventh District Court, the company requested federal protection on September 26, 2023, just the day the cancellation of the concessions owned by Gangfeng Lithium was announced.
MSB demanded the protection of federal justice to continue operating the mining concession located in the Sierra de Sonora and that the decision to cancel the concession not be registered in the Public Mining Registry, in addition to not reporting it to the Directorate of Cartography and Mining Concessions until such cancellation does not constitute res judicata.
The District Court, however, rejected the request, which motivated Minera Sonora Borax to request a review before the Second Collegiate Court which was filed under file number 353/2023.
The request was filed on October 5, 2023 and fell to the President of the Second Collegiate Court in Criminal and Administrative Matters, Manuel María Morteo Reyes, also based in Hermosillo.
In their arguments, the judges of the Second Collegiate Court considered that it was not appropriate to grant the suspension requested by the company, since this would imply forcing the authority to carry out the conduct or act that it refused to do, which is exclusive to the ruling of protection.
Minera Sonora Borax SA de CV is a 99% owned subsidiary of Bacanora Lithium, it is part of the Sonora Lithium Project with possession of the La Ventana and La Ventana 1 concessions.
Bacanora Lithium was formerly Bacanora Minerals Ltd. (Bacanora) and is a Canadian exploration mining company, focused primarily on lithium and borates. It is dedicated to the identification, acquisition, exploration and development of lithium properties in Mexico.
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Currently, the company’s only other major asset is the Magdalena borate project, wholly owned by Bacanora, with an area of 16,503 hectares.
The firm has ownership of the concessions through three subsidiaries: Minera Sonora Borax SA de CV (MSB); Mexilit SA de CV, a joint venture with Rare Earth Minerals (REM); and Megalit SA de CV, also a Joint Venture (JV) with REM.
2024-04-06 00:00:00
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