A Mexican law that nationalizes its future lithium industry violates its trade obligations and could prove costly to the government if mining companies seek to recoup losses, the local branch of the International Chamber of Commerce said on Wednesday.
Mexico’s Congress last week approved a bill championed by President Andres Manuel Lopez Obrador to nationalize lithium. He has also vowed to review all active contracts to exploit the coveted battery metal.
The proposal was passed by a large majority of lawmakers in both chambers who argued that Mexico’s untapped lithium deposits should only be developed by a government-run company, not foreign or private miners.
But the law conflicts with Mexico’s trade treaty obligations under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), according to the Mexico office of the International Chamber of Commerce.
The business group said it recognized that Mexico’s constitution already declares that all mineral resources belong to the nation.
“But that recognition shouldn’t be confused with the rights of Mexican and foreign investors to participate, by way of concessions, in economic activity related to exploration, exploitation and production of mineral resources,” according to the statement.
Close to a dozen foreign companies hold contracts to explore potential Mexican lithium deposits, including Bacanora Lithium, which is controlled by Chinese firm Ganfeng Lithium Co.
The business group cited language that prohibits parties to the trade pact from introducing new restrictions on economic activity not explicitly reserved to the state.
CPTPP entered into force in late 2018, just weeks after Lopez Obrador began his six-year term.
The business group warned that Mexico will have to compensate companies with active mining concessions if their rights are violated, and said it is “worrying” that the new law does not clearly spell out how mining companies with concessions in Mexico will be affected.
(By David Alire Garcia; Editing by Sandra Maler)
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