Chinese company Ganfeng sues Mexico for revoking lithium concessions
Photo: Wikimedia Commons.
Chinese mining company Ganfeng has filed a lawsuit against Mexico at the International Centre for Settlement of Investment Disputes (ICSID), a World Bank entity. The lawsuit, filed last Friday, alleges the cancellation of concessions for the construction of a large lithium mine in the state of Sonora.
The cancellation of these concessions occurred after Mexico nationalized its lithium reserves, a decision made by President Andrés Manuel López Obrador. Last November, Ganfeng Lithium Group reported that Mexico’s Ministry of Economy confirmed the cancellation of the concessions on the grounds that the minimum investment requirements were not met.
This case is framed under the 2008 Bilateral Investment Treaty between Mexico and China and the 2006 Bilateral Investment Treaty between the United Kingdom and Mexico, also involving Bacanora Lithium Limited and Sonora Lithium Ltd., both from the United Kingdom.
Ganfeng, a prominent battery manufacturer and lithium miner, has been involved in this project since 2019, when it acquired 22.5% of Bacanora Lithium’s shares, allowing the project to advance with Chinese technology. Later, Ganfeng bought the entire property of Bacanora Lithium, becoming the owner of the deposit.
Ganfeng’s arrival in Mexico dates back approximately 10 years, when Sonoran geologist Martín Vidal discovered lithium in the northwestern Sierra region of Sonora while searching for sodium sulfate alongside researchers from England and Australia. This discovery led to the formation of Bacanora Minerals, which, with the entry of more shareholders, became Bacanora Lithium. The complexity of extracting lithium from clay rocks caused delays which were also exacerbated by lack of resources, as an initial investment of $420 million was required.
In 2019, Ganfeng Lithium, based in Shanghai and with offices in Canada, bought a significant portion of Bacanora Lithium’s shares, allowing the project to move forward. Ganfeng completed the full acquisition of the company, consolidating itself as a leader in the production of metallic lithium and products derived from lithium carbonate.
Ganfeng’s recent lawsuit adds to a climate of growing tension between Mexico and foreign companies due to President López Obrador’s resource nationalization policy. This case highlights the challenges facing foreign investments in Mexico’s mining sector and the business interests involved.
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