China’s Ganfeng and two of its subsidiaries in Mexico have filed an arbitration case against the Mexican government due to the cancellation of a mining concession for an advanced lithium project in the state of Sonora. This case was registered with the International Centre for Settlement of Investment Disputes (ICSID), part of the World Bank.
Government of Mexico sued by Ganfeng
The conflict arises from the Mexican government’s decision last August to revoke the concessions granted to Ganfeng. This action was a consequence of the nationalization of the lithium industry. lithium industry by then President Andres Manuel Lopez Obrador in 2022.
In 2021, Ganfeng acquired Bacanora Lithium, a company that was developing a lithium mine valued at US$800 million in Sonora. At that time, the goal was to begin commercial production in 2023. However, legislation passed in April 2022 gave the Mexican state full control over lithium mining, paralyzing the Chinese company’s activities.
Industry support and government confirmation
Although the mining industry supported Ganfeng arguing that the government did not have the legal authority to cancel the concessions, the Mexican Ministry of Economy ratified the original decision. This governmental endorsement maintains the cancellation of the concessions.
The Sonora project included an open pit mine and processing plant, with the capacity to produce 35,000 tons of lithium per year. This project was emerging as a crucial source of lithium for Mexico’s growing electric vehicle supply chain.
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Source: mining
Photo: Shutterstock
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