Ganfeng: "We are going to continue in Sonora because the laws of Mexico allow lithium to be exploited"

A woman works at one of the Ganfeng company's lithium battery plants in China.Joyce Zhou (Reuters)

Ganfeng, the world's largest producer of lithium batteries, focuses on its expansion in Latin America and strengthens its presence in the region.

The last step has been taken in Mexico, by acquiring 100% of the largest deposit in the country, in Sonora, on the border with the United States.

As a spokesperson for the company in Mexico points out, electric cars will occupy the majority of the automotive market and for this it will be necessary to increase global production of lithium.

According to the International Energy Agency, this demand will have to multiply by 40 in 20 years to cover the manufacture of batteries and accumulators during the transition from fossil fuels to clean energy.

Faced with such a scenario, the Mexican government refuses to be left behind and sees the Sonora deposit with great optimism, the first of many that could be exploited for the benefit of the country.

Currently that lithium, concentrated mainly in clay and rocks, is in private hands and only in the exploration phase.

The promising future that several experts predict for lithium and the increase in prices in international markets have pushed President López Obrador to make the mineral the new flag of the country's energy sovereignty, after oil and gas.

Although Mexico has not yet extracted a single gram of lithium from its territory, the president has included it in his Electricity Reform proposal as a strategic natural resource for the nation.

“We have to protect this coveted mineral.

It belongs to the nation, [we cannot] allow it to pass into the hands of corporations or hegemonic powers”, he has repeated on several occasions.

Said affirmations collide with the total control that according to the legislation the Chinese company has over the Sonora deposit.

“Ganfeng has always acted and will act in accordance with the laws of Mexico.

And currently, those laws allow the concession of lithium, so you can extract and explore the mineral if you have the ability to do so,” says a spokesperson for the mining company.

Regarding the Electrical Reform, still not approved, the company assures that the document allows operating concessions like its own and that in 24 months the mine will be fully operational.

“We do not think about leaving Mexico.

We are very confident that the Sonora project complies with all laws and is going to be very positive for both Mexico and the region,” they point out.

Meanwhile, more mining companies have taken on the task of requesting concessions to extract lithium in Mexico.

López Obrador announced a few months ago that his government will create a state company for its exploitation and no more concessions will be granted to extract lithium.

“We are going to create a Mexican company for lithium.

We do not want to be a territory of conflict between powers, neither Russia, nor China nor the United States”, defended the president.

After the drop in metal prices during the pandemic, the private sector did not expect to face López Obrador's sudden enthusiasm for lithium, but the climate economy, the electric car market and the increase in demand at the prices have skyrocketed globally.

Now the ore is trading above $49,000 a ton on international markets.

López Obrador himself criticized the Federal Competition Commission (Cofece) for having given the go-ahead to the acquisition of Bacanora by Ganfeng.

“That is why my usual disagreement against these autonomous organizations because it was a scaffolding that they created to

to the Government, so that, if a new government of the people arrived, it could not make decisions, that meant neoliberalism, ”said the president at a press conference.

Cofece's authorization for the concentration of Bacanora Lithium and Ganfeng was seen by the Executive as an operation carried out behind the Government's back.

The Chinese company, which already had a 50% stake in Bacanora, acquired 100% of the Anglo-Canadian company last year for $392 million.

The purchase of the shares also involved the transfer of the mining concessions that the federal government had granted to Bacanora since 2017. After the statements from the National Palace, Cofece declared in a statement that it had not found "signs of market concentration" and that for that reason he had given the green light to the transaction.

“The operation involved a change in shares of the Mexican companies holding the concessions,

The company assures that there is "no type of irregularity" in the approval and that they are not concerned with the president's order to open an investigation in this regard.

"The purchase of the part of Bacanora that Ganfeng did not have is completely legal and in accordance with Mexican law," says the spokesman.

Of the 20 operators currently working on the pilot project, the company indicates that they will hire more than 250 workers to operate the large-scale plants, "95% of whom will be from Mexico," they point out.

The Chinese giant considers that given the absence of a lithium industry in the country and the technical and metallurgical processing complexity of the deposit, they are the only ones that can provide the knowledge and technology necessary for the operation.

The Sonora project has so far cost 50 million dollars and the mining company plans to spend another 3,000 in the extraction and manufacture of batteries in the future.

Of that amount, around 1,000 million will arrive "in the next five years," they say.

“Our plan is to have a company that dominates the entire lithium value chain in Mexico: that not only includes the mine, but also the production of batteries and their recycling.

We are the only company in the world that combines lithium mining, mineral processing, battery manufacturing, cells and battery recycling”,

points out the Chinese giant.

The benefits of the company with a presence in Australia, Chile, Mali and Argentina reached up to 170 million dollars last year.

In addition to the above, in 2021 it signed a contract with Tesla Motors to directly supply battery-quality mineral and they claim to be in talks with Volkswagen, another of the large automakers located in Mexico.

Just 1,500 kilometers from the Sonoran desert, Tesla, the electric car giant owned by Elon Musk, has its largest factory on the continent.

Ganfeng assures that its lithium production will reach 35,000 tons per year to supply both the domestic and foreign markets.

In the race for lithium, the Mexican Geological Service, which depends on the Ministry of Economy, announced in October last year that the Government will invest 55 million pesos (2.63 million dollars) for lithium exploration, with the aim to probe how much ore the country has in Sonora, San Luis Potosí and Zacatecas, among other states that have shown signs of having high concentrations of the material.

It will depend on this to determine if the deposits that exist in Mexico are economically profitable.

In this tug of war, the Ministry of Economy, in line with the president's statements, has declared that there are still no guaranteed concessions for the exploration and exploitation of lithium in Mexico.

Meanwhile, Ganfeng, protected by current legislation, continues to work on Sonora soil.

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