To nationalize or not to nationalize lithium? Five experts offer answers to this question that has generated political tensions in Mexico.
Not only are people saying that lithium in Mexico will be the white gold or oil of the future, but also that this Latin country has the potential to generate great fortunes through exploitation of this mineral. Is this really true?
The debate formally began on November 11, 2020, when Morena Senator and Chairman of the Finance and Public Credit Commission Alejandro Armenta Mier published a proposal to reform Article 27 of the Constitution in order to nationalize lithium.
The Senator believes that lithium is “white gold”, due to its increasing use in the manufacture of batteries, so it should be considered a strategic asset for the federation, just like oil.
This legislator has said that “the world will run on lithium in the coming years.” That’s why the country’s energy sovereignty would depend on nationalizing lithium, following the decades-old scheme that President Lázaro Cárdenas del Río rolled out with oil.
With this in mind, Tec Review interviewed five specialists who agree that Senator Armenta’s proposal needs refining for the good of Mexico.
According to Sergio Almazán, President of the Association of Mining Engineers, Metallurgists, and Geologists of Mexico (AIMMGM), lithium should not be considered as either the white gold or oil of the future, since this mineral is very far from having the global importance of those natural resources.
It’s true that lithium has aroused a lot of interest recently, especially for its use in electric car batteries, but this doesn’t mean that the global mining industry has suddenly shifted its entire strategy to lithium, at least this is what the numbers show.
“Last year, world lithium production was 60,000 tons. It’s true that demand has been growing in recent years, at almost 20% per year, and it’s projected that it will reach production of 800,000 tons by 2025. However, this is still very far from world demand of 25 million tons of copper per year,” says Almazán, who adds that although it’s true that lithium is widely used in gadgets and electric cars, the same can also be said of copper.
According to Armando Ernesto Alatorre Campos, President of the College of Mining Engineers, Metallurgists, and Geologists of Mexico (CIMMGM), there is a semantic confusion in the national debate, especially when it’s said that lithium is the oil of the future.
“It’s a misunderstood or misapplied concept. When it’s called the oil of the future, you might think that lithium generates energy, but it doesn’t. The main use of lithium is in the manufacture of batteries for electric cars. Instead of generating energy, they save energy that is generated in many possible ways,” explains Alatorre Campos.
Increasing global demand for lithium makes it valuable to nations that have mineral reserves of this resource. In particular, because there has been little investment in the infrastructure necessary to take advantage of it until now. That’s why it’s now seen as a new business niche.
Supply chains have been hindered by current low investment in the sector, despite increasing demand for lithium as the world shifts away from its dependence on oil.
To this end, the World Bank estimates that there will be an increase of around 450% in demand for materials such as lithium by 2050, as part of the transition to a future in which oil is no longer the hottest energy resource.
Therefore, Blas Luis Pérez Henríquez, Director of the Global Initiative for Innovation in Energy, Water and Infrastructure at Stanford University, believes that it is somewhat inaccurate to compare lithium with the wealth that simple exploitation of crude oil brought to the oil-producing countries of the past.
“The important thing is being able to produce quality lithium on a large scale for batteries and other high value-added products that the global economy demands. This requires investment, innovation, and the development of skills and specialized knowledge,” he clarifies.
Mexico is considered one of the ten most important countries for mining worldwide. Year after year, it produces between 15 and 18 of the metals in the top 10 places of production. Gold, silver, bromine, zinc, copper, molybdenum, and fluorite are on the list.
So, focusing on lithium alone means losing focus on the bigger picture.
“Is lithium the future of mining in Mexico? That’s not the case. The future of national mining lies in supporting all of the research that’s required in all the metals that the country has,” says the President of the AIMMGM.
It’s important to mention that the main lithium producers are Australia and Chile. The lithium reserves of these two countries make up 80% of reserves worldwide. Furthermore, there are three different types of deposits of this mineral in the world: sediments, brine and rocks. In Australia, lithium is found in rocks, while in Chile, this mineral is in brine.