Mexico reviewing cancellation of Ganfeng lithium concessions, says president

Mexico is reviewing the legal basis of the decision of the general directorate of mines to cancel nine concessions granted to Chinese company Ganfeng Lithium to produce lithium in Sonora state, according to President Andrés Manuel López Obrador.

The concessions were awarded prior to lithium’s nationalization in the 2022 mining reform.

“It is being reviewed because the mining concessions were basically granted for the extraction of gold, silver and copper and not lithium. So, that is why the lithium nationalization decree was issued, and it’s only this case of this mining company of Chinese origin that originally belonged to an English company and they acquired the concession,” the president said in his daily press conference on Thursday. London-based Bacanora Lithium previously held the rights to the project.

“We are reviewing that legally, but we have made the decision that lithium belongs to the nation, because it’s a strategic mineral. And we’re going to give legal follow-up to the nationalization decree,” said AMLO, as he is known.

The president of the Mexican mining chamber (Camimex), Jaime Gutiérrez, questioned on Wednesday the validity of the decision to cancel Ganfeng's concessions for its Sonora project, since the new mining legislation should not be applied retroactively.

Ganfeng said in a recent report to investors that “the reform to the mining law was not supposed to apply to pre-existing concessions, including those held by Mexican subsidiaries. The company's position is that the project concessions cannot be affected by these reforms because they were granted prior to the enactment of the reform to the mining law.”

“This is consistent with the terms of the political constitution of Mexico, which, among other principles and rights, recognizes the principles of legality and non-retroactivity of laws,” added the Chinese company.

Information on official Vietnamese website pages, which were later deleted, mentioned in recent days that Ganfeng and its subsidiaries submitted an administrative review to the Mexican economy ministry.

BNamericas contacted the ministry for comment but did not receive an immediate response. 

In January, López Obrador indicated that his administration intends to renegotiate lithium concessions granted before the first reform to the mining law in April 2022, with a view to paving the way for the Sonora sustainable energy plan.

The intention was to reach agreements with “one or two” companies so that state-owned LitioMx – created in August 2022 – could manage all production.

But since March, only Advance Lithium and Silver Valley Metals have confirmed that they are in talks with the government and are willing to form joint ventures with the State to mine lithium.

The Sonora lithium clay project is the most advanced in the country, and Ganfeng has said it contains approximately 8.82Mt of lithium carbonate equivalent.