Future lithium mining joint ventures between Mexico’s new state-run company and private producers must give the government a majority stake, the head of LitioMx told Reuters, while also expressing an openness to offer tax breaks to kick-off projects.
Championed by President Andres Manuel Lopez Obrador, Mexican lawmakers enacted sweeping lithium nationalization last year seeking to ensure government control over the country’s nascent industry, even as opponents sharply criticized the move as likely to dissuade private investment in Mexico’s mostly clay-based deposits.
But in an interview late on Wednesday, LitioMx CEO Pablo Taddei stressed that private players could partner up with the new state-owned company so long as the government can exercise control over the projects, which the government has declared as strategic.
“There isn’t any doubt that the Mexican government must have control in a strategic association with private companies,” Taddei said.
Lopez Obrador created LitioMX, formally known as Litio Para Mexico, by decree last August, even though the country does not yet produce any lithium despite indications it could hold potentially rich deposits of the ultra-light white metal.
Lithium is coveted by makers of rechargeable batteries, crucial components for future fleets of electric vehicles.
Taddei, who holds graduate degrees from Harvard University and the University of Michigan in the United States, added that the government was also prepared to offer tax incentives in an effort to make such tie-ups attractive to both sides.
“They have to be associations that are attractive to them and us,” he said, adding that future lithium mining projects will be analyzed on a case-by-case basis.
“We are open to giving those incentives to make it a win-win.”
Taddei declined to detail tax or other would-be financial incentives the government might consider.
But Taddei did explain that future joint ventures would take into consideration factors, including the type of deposit, in deciding what percent of projects the government should own.
To date, Mexican lithium deposits identified in early exploration efforts reveal mostly clay-based deposits, which many industry experts argue will be much more difficult and costly to develop.
Nearly all global lithium production is today mined from brine salt flats, or from traditional rock deposits.
Taddei also declined to name companies with which his team has held meetings, only that some come from outside the United States and Canada.
Chinese lithium miner and battery maker Ganfeng 002460.SZ controls Mexico’s most advanced lithium project, Bacanora Lithium located in northern Sonora state, but Taddei declined to comment on talks over the project.
He did, however, say an announcement concerning the project will come later this month.
Going forward, LitioMx must also have a stake in all technological patents stemming from future projects, Taddei said.
He did not specify a start date for the state company’s first project, but expressed optimism that Mexico will ultimately benefit from surging demand for lithium.