Ganfeng sues Mexico over lithium permit cancellation

China’s Ganfeng and two of its subsidiaries in Mexico have initiated an arbitration case against the country’s government over a cancelled mining concession for an advance lithium project in the state of Sonora.

The request by the Chinese lithium mining and processing giant, Bacanora Lithium and Sonora Lithium, was posted on Friday at the World Bank’s dispute settlement centre, the International Centre for Settlement of Investment Disputes (ICSID).

The case centres around the government’s decision last August to cancel Ganfeng’s concessions. This move followed former President Andrés Manuel López Obrador’s nationalization of Mexico’s nascent lithium industry in 2022.

In 2021, Ganfeng acquired Bacanora Lithium, which was in the midst of the mine development worth $800 million. The company’s goal at the time was to kick off commercial production in 2023. But Mexican legislators approved a bill in April 2022 granting the state full authority over lithium mining and activities were halted.

While the industry backed Ganfeng saying the government could not lawfully cancel licences, Mexico’s economy ministry upheld the original decision after the approval of the bill regulating mining and water concessions.

The Sonora project comprised an open-pit mine and processing facility, which were expected to produce 35,000 tonnes of lithium annually, providing the country with a domestic source of the battery metal for its rapidly growing electric-vehicle supply chain.