Mexico is among the top 10 lithium-rich countries, the test is keeping corruption and cartels out of the business

Lithium, a mineral of great importance for the clean energy industry, has become the subject of debate after the decree of February 18 that made its exploitation official in Mexico.

The potential economic impact of Mexico’s lithium being incorporated into the market is important; There is also talk about the different uses that the Mexican government will promote in different industries.

Sonora will be the home of the state company Litio para México ( LitioMX ), created by decree on August 23, 2022. The governor, Alfonso Durazo Montaño, was appointed by the president, Andrés Manuel López Obrador (AMLO), to coordinate the project of exploitation.

Currently, the most promising use of lithium is as a power source for electronic devices and vehicles. Its application in the pharmaceutical industry and in the production of flexible glasses for medical use is also growing. It is also attractive for making aluminum, since it reduces its density and increases its rigidity.

Mexico among the 10 countries with the largest lithium reserves

Since April 2022, the chambers of Congress have approved a series of reforms focused on making the public utility of the mineral official. The state company LitioMx was also created, under the supervision of the Secretary of Energy (Sener). The general director will be the engineer Pablo Daniel Taddei, son of the delegate of the Welfare Secretariat, Jorge Taddei.

The objective of these decisions is to reserve 234,855 hectares for the exploitation of lithium in Sonora, according to the government of Mexico. The largest deposit of this mineral is located in that region and it is estimated that it achieves production of 17,500 tons per year. Due to these resources, the United States Geological Survey places Mexico among the 10 countries with the largest lithium reserves.

Chiapas, Michoacán, Morelos, Sinaloa, and Veracruz have a lithium deposit respectively; in Coahuila, Guanajuato, Hidalgo, Jalisco, San Luis Potosí, and Zacatecas there are three in each; Chihuahua and Tamaulipas have five; Durango, seven, Nuevo León, eight; Oaxaca, nine; Puebla, 12, and Sonora, 13, indicated Alejandro Armenta Mier, president of the Board of Directors of the Senate of the Republic.

Mexico could pay 4.5 times the external debt with the lithium trade, added Armenta; However, the Mexican Network of People Affected by Mining (REMA) and Mining Watch-Canada warned that the beneficiaries after the officialization of the mineral industry are the United States and Canada.

Can lithium survive government corruption and powerful cartels?

Mexico is a country that has long been plagued by government corruption. Corruption is a pervasive and endemic problem that has infiltrated all levels of government, from the highest levels of power to the lowest ranks of bureaucracy. The impact of government corruption in Mexico is far-reaching, undermining economic growth, political stability, and social justice.

One of the primary causes of government corruption in Mexico is the lack of accountability and transparency in government institutions. Corruption thrives in an environment where there is little oversight or scrutiny, and public officials are free to act with impunity. The lack of an independent judiciary and weak civil society institutions also contribute to the problem, as these institutions are often unable to hold corrupt officials accountable.

Another factor that contributes to government corruption in Mexico is the country’s economic inequality. Mexico is one of the most unequal countries in the world, with a small group of wealthy elites controlling much of the country’s wealth and resources. This concentration of economic power creates a system of patronage, where political favors are traded for economic benefits. This system perpetuates corruption by allowing those with money and power to influence government decision-making in their favor.

Even with the opportunity for a great economic windfall from Mexico’s lithium mining, the government has not proven state-run profits benefit the people, but instead just buys more power for the already ruling class.

If lithium survives the corruption within Mexico’s ruling class, can it survive the most powerful forces in Mexico, the cartels?

Mexican cartels have been known to infiltrate government and businesses in Mexico. Cartels use their power and influence to bribe or intimidate government officials and business leaders to further their criminal activities. This can include gaining control over government institutions or using legitimate businesses to launder their drug money.

In another case, the Sinaloa cartel was found to have infiltrated Mexico’s Federal Electricity Commission. The cartel used their influence within the commission to steal electricity to power their drug labs and operations, causing significant financial losses for the government and disruption to the electrical grid.

A likely scenario with lithium minds is the theft of lithium by cartels with impunity due to their power within government institutions.

The infiltration of cartels into government and businesses in Mexico is a significant challenge and undermines the rule of law and the country’s democratic institutions. It is a complex problem that requires a coordinated effort from law enforcement, government institutions, and civil society organizations to root out corruption and hold those responsible accountable for their actions.

Until the government can gain control of cartels and root out internal corruption, businesses will remain cautious about doing business with Mexico-run lithium mines because the supply chain is easily disrupted when cartels and corruption work together.