AMLO: Oil can't be replaced until lithium in development

Mexican President Andrés Manuel López Obrador (AMLO) said the country can only phase out oil once it has domestic lithium production underway. 

AMLO made the comments at a press conference Monday while discussing proposed reforms that include nationalizing lithium production.

That proposal is one of the lower profile aspects of constitutional reforms to the electric power sector now before congress.

The initiative would see the current lithium concessions scrapped, with exploration and development of the minerals controlled by the state, with the aim of delivering maximum benefits to the public.

“The reform establishes that the nation take advantage of its lithium [reserves] as a strategic mineral for the country’s development,” said AMLO. “It will not be possible to replace oil if there is no development of lithium [to support] alternative energy generation.” 

Nationalization of lithium could still occur in the future under another initiative, should the current proposal fail. However, AMLO continues to push for the current proposal. 

The proposal also includes the cancellation of all private power purchase agreements, priority dispatch to favor state-owned utility CFE and CFE’s takeover of a large part of the sector’s regulatory duties, among other aspects.

The measures are currently stalled while the president and lawmakers in the ruling Morena Party, which AMLO founded, and their allies seek support to win the two-thirds majority needed to pass the constitutional reforms.

AMLO on Monday again chided opponents of the reform package, saying the final vote will demonstrate which lawmakers support CFE and which support foreign-owned players Iberdrola and Repsol. No timeline for a floor vote in either house of congress on the bill has yet to emerge. 

López Obrador has come under criticism for pushing an energy policy that is hydrocarbons centered, moving far too slowly on energy transition and statist to the point of damaging competition with private sector players.

Mexico is not currently a lithium producer, but this is set to change when Bacanora Lithium and Ganfeng Lithium’s US$420mn Sonora project starts operations, which the companies are targeting by end-2023. 

The remainder of Mexico’s lithium projects are in the early stages of exploration. 

Members of the Morena Party have been accused of making unrealistic claims about lithium resources in the country, including that the Sonora project is the world’s largest lithium deposit.

While Sonora’s resources are around 243Mt, just 0.3% of this is lithium, with the rest clay and other minerals, mining chamber Camimex president Jaime Gutiérrez Núñez told legislators at a recent ‘open dialogue’ event to discuss the reforms.

“Although Mexico’s lithium potential has generated a lot of expectation, we still don’t know for certain if this mineral exists in the quantity and quality needed to be profitable,” he said.