Mexico faces arbitration from companies over lithium

The Chinese company Ganfeng Lithium, along with the British Bacanora Lithium and Sonora Lithium, has initiated international arbitration against the Mexican government. This action comes after the cancellation of concessions that allowed the companies to exploit a lithium megadeposit in Sonora last year. The arbitration procedure was launched before the International Center for Settlement of Investment Disputes of the World Bank.

In May 2024, an arbitration proceeding was started regarding a series of laws, regulations, and related measures issued by Mexico that effectively nationalized lithium resources. This impacted the operation of the project and led to the cancellation of mineral concessions held by Mexican subsidiaries. The Mexican government approved modifications to the Mining Law in April 2022, declaring lithium a strategic mineral and granting the exclusive rights to its exploration, production, and commercialization to the State.

The company reports that it was in talks with the Ministry of Economy when the General Directorate of Mines withdrew nine lithium concessions held by its Mexican subsidiaries, including the key concessions for the Sonora project. The Chinese company argues that its subsidiaries met the minimum investment requirements stipulated by Mexican law and exceeded the resources under development required by the government.

Despite the reform, the Mexican government did not raise any objections until recently. They notified the company that the minimum investment obligations were allegedly not met, prompting the cancellation of the lithium concessions. According to the United States Geological Survey, Mexico holds 1.7 million tons of lithium reserves, with a majority situated in the Sonora deposit.