Mexican minister confirms plans for state-owned lithium company

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The extraction of lithium as a strategic natural resource in Mexico will have to be carried out by the state, according to the Minister of Energy Rocío Nahle, confirming the plan to create a public company.

When asked in an evening news program whether the government plans to mine lithium resources through a new state-owned company, Nahle said: “It will have to be like this for lithium mining. “

She also said that the establishment of the company would be accompanied by secondary legislation if President Andrés Manuel López Obrador (AMLO) succeeded in pushing through the proposed constitutional reforms in the electricity sector.

The package includes an overhaul of the national lithium industry, among other proposals that involve the cancellation of all existing contracts and permits related to the production and sale and the phasing out of the body’s hydrocarbon regulator CNH of CRE energy monitoring and of the Cenace network operator.

The comments answer one of the main unanswered questions about the initiative sent by AMLO to Congress on September 30, adding weight to rumors that officials are working on the structure of the lithium company and considering naming it Litomex, similar to the national oil company Pemex.

Although AMLO’s Morena party remains the largest bloc in both houses of congress, it still appears unable to secure the two-thirds of the lower house votes needed to change the constitution, even with the support of minor allies. .

In his relatively candid comments, Nahle compared the action to the 1938 expropriation of foreign oil companies by then-President Lázaro Cárdenas, saying: “This decision has, for eight decades, brought us wealth, schools. , hospitals, roads, preparation, substance, etc.

“Lithium will be the same, without a doubt, and I think it will be faster, being a strategic mineral used today as a raw material for the manufacture of batteries”, she declared during the organized round table. by national broadcaster Televisa on Wednesday.

FOCUS ON POWER REFORMS

Nahle was also asked about canceling contracts and permits, as detailed in a draft article written in the current bill ahead of Congress.

Regarding private generators, she said “[The reforms] do not cancel their right to be able to generate, because 46% of the market will be left to them to participate.

This is a provision of the bill allowing private companies to retain a maximum share of 46% of the country’s electricity market, and Nahle added that the provision in the article does not mean expropriation. .

The expropriation is legal under the Mexican constitution, and some critics believe it would be better than what would happen with the proposed reforms, as the expropriation rules demand immediate compensation from the parties involved.

Critics say that while making operations unsustainable, whether by eroding the rule of law or forcing companies to agree to negotiations with the federal utilities CFE as the sole purchaser of electricity, is not an expropriation, it will hamper future private investment.

In the words of CRE regulator Montserrat Ramiro, speaking in a recent Fitch panel, “Although this is not an expropriation… in legal terms, it forces companies to operate according to the imposed criteria. by CFE. This makes it, for all intents and purposes, impossible to operate as planned at the time the investments were made. “

Nahle said the reforms are, however, “by no means an affront” to property rights in Mexico, but rather a necessity born out of past abuses.

The minister highlighted the self-supply contracts built into the 2013-14 energy reforms, designed to allow large companies to produce their own electricity.

“The 2013 reform opened a parenthesis for large factories to produce their electricity, 239 permits have been issued, there should be 239 users, but there are 7,000 users, and they have created a parallel market without a permit to sell electricity. electricity, ”Nahle said.

The self-supply contracts often mentioned by Nahle and other officials actually date back to the 1990s and were mostly protected by new contracts when the 2013-14 reforms took effect.

“These contracts they have signed with CFE are for 20 years, which is very onerous for CFE and for all Mexicans, and will be canceled, but that does not mean that the production plant of this company will be closed, ”she said.

“It would be absurd for us as Mexicans to be subjected to commercial slavery for 20 years on such favorable terms. [for private parties] and so damaging to the state and to all Mexicans.

Nahle went on to quote the contracts with Iberdrola which she considers to be abusive. The Spanish energy actor has been in public feud with the López Obrador administration for more than a year.

“Iberdrola has signed a series of very advantageous contracts with CFE,” said Nahle.

“We said it couldn’t go on like this. [They said] “No, you have already signed it”. Yes, but it cannot continue like this, it costs too much, ”said the minister, adding that many projects have the support of development banks, without specifically mentioning Iberdrola.

“What they have brought to the investment world needs to be questioned [in arbitration]because much of it was financed by development banks, ”she said.

Nahle also referred to the Texas freeze in February that crippled Mexico’s natural gas supply, forcing 22 private power plants to go offline.


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