The Government of Mexico is seeking an agreement with Ganfeng Lithium (SHE: 002460) after the Chinese lithium giant initiated an arbitration case with the World Bank’s dispute settlement centre over a cancelled lithium project in the state of Sonora.
Ganfeng filed the request last Friday at the World Bank’s International Centre for Settlement and Investment Disputes (ICSID). It has been joined by Bacanora Lithium and Sonora Lithium.
In 2021, Ganfeng acquired Bacanora Lithium, which was developing the $800 million mine. The company aimed to commence commercial production in 2023. However, in April 2022, Mexican legislators approved a bill granting the state full authority over lithium mining, halting all activities.
Mexican President Andres Manuel López Obrador said that the dispute with Ganfeng was a consequence of confusion over how previous governments handled concessions.
President López Obrador has refused to offer any new mining concessions since taking office in late 2018. He said that previous governments had granted too many. He has since created a national lithium company to kick off projects. Its head, Pablo Taddei, said the company could partner with private companies for developments, provided the government holds the majority stake.
Currently, no commercial production of lithium exists in Mexico.
López Obrador, whose term as president ends in September, said that public-private partnerships for lithium projects are permitted. The Sonora project includes an open-pit mine and processing facility expected to produce 35,000 tonnes of lithium annually.
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Ganfeng picks up 15% stake in Argentina lithium project
Ganfeng Lithium is a leading Chinese lithium producer. It operates globally with significant projects in China, Australia, Argentina and Mexico.
In Argentina, Ganfeng is actively developing the Cauchari-Olaroz lithium brine project in partnership with Lithium Americas (Argentina) Corp. (TSX: LAAC) (NYSE: LAAC). Ganfeng signed an investment agreement in early March to buy a 15 per cent stake in the Pastos Grandes operation in the Salta Province for USD$70 million. Ganfeng expects the deal will close by the end of June.
The company competes with several key players in the region, including Lithium South Development Corporation (TSXV: LIS) (OTCQB: LISMF) (Frankfurt: OGPQ), which is advancing its Hombre Muerto North project.
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