Sonora
Bacanora Lithium’s Sonora project.

Lithium and the False “Energy Transition”

On Tuesday, September 22, American company Tesla celebrated Tesla Battery Day, which coincides with the company’s Annual General Meeting. Tesla is the largest producer of lithium batteries and electric cars in North America, and its majority shareholder is businessman Elon Musk, who has appeared in recent years as a promoter of the so-called “energy transition” to boost the sale of his products. Lithium batteries, having a more efficient storage capacity than those made with other minerals, have seen their demand increase primarily driven by the automotive and electronics industries. Due to this fact, during the last decade, lithium has been characterized by the United States Geological Survey (USGS) as a “critical” element and mining companies, the automotive industry, and governments have begun to promote lithium as a “green metal", “essential” for the energy transition.

The global importance that has been placed on lithium, is causing a process of financial speculation, as well as disputes for obtaining sources of supply between European countries and the US in attempting to compete with China and other Asian countries that currently dominate the market of this metal. In this context, the new Free Trade Agreement signed between the governments of Mexico, the United States and Canada (TMEC), indicates that lithium batteries are an “essential” component for the domestic industry, and determines that countries have a 3-year grace period to ensure that 75% of their lithium is sourced regionally in order to avoid paying tariffs. As a result of this agreement, just a few weeks ago the import duties for electric cars were eliminated in Mexico. These measures to increase the consumption of lithium products extracted in the region, should be understood by the fact that world production is currently concentrated in Australia, South America and Asia.  As such, this puts more pressure on the countries housing deposits of this mineral, principally in Mexico and Canada, where we can see companies trying to establish themselves to supply lithium to the regional automotive industry.

In Mexico, one result of this “lithium rush” is a wave of speculation which has produced widespread concessioning of large tracks of land in the country, in order to speculate on their price, inflate reserves and increase the value of the shares of these companies, which has led to land dispossession in some communities. Currently there are 97 thousand hectares under concession in Mexico and 537 thousand more in process, for the extraction of lithium, distributed over 36 projects that are controlled by 10 companies. They are mostly small Canadian companies on the brink of bankruptcy, which rely heavily on financial speculation in order to generate resources on the Toronto Stock Exchange. Of the 36 projects in the country, only the Bacanora Lithium project in Sonora is the one that has advanced in its development. The rest are looking for financing, trying to find a buyer or partner, or doing limited explorations.

Bacanora Lithium’s Sonora project, has among its investors, Japanese-owned Hanwa, which signed an agreement with Bacanora Lithium for the supply of lithium extracted during the first 10 years of the project. In addition to this agreement, the mining project also directly includes Chinese company Ganfeng Lithium, as a joint-venture partner. In 2019, Ganfeng invested directly in Bacanora Lithium and the Sonora project, becoming the owner of 22.5% of the project's shares in Mexico. As part of the investment agreement, Ganfeng is entitled to 50% of the production of the lithium carbonate that is mined. This relationship of the project with Gangfeng is extremely important because this company has agreements signed directly with Tesla. In 2015 Ganfeng Lithium signed an agreement with Tesla to ensure the supply of lithium for its operations at its battery and car plant in Nevada, USA in partnership with Panasonic. The possible extraction of lithium in Sonora, related to the growth of “green” industries like Tesla’s or Hanwa’s, will generate the same impacts as always. As it is a lithium hard rock deposit, this project will use open-pit mining methods for the extraction process, which are accompanied by processing and concentration plants which require the use of chemical reagents.

This model is clear in the lithium mines of Chile and Argentina, where there is very little information on the true hydrological impacts caused by highly intensive water extraction, and where companies constantly violate the self-determination of Indigenous peoples, destroying their ancestral ways of life and in many cases provoking their dispossession from their territories. The production of lithium-ion batteries by companies like Tesla has also had serious impacts in the Democratic Republic of the Congo, where large amounts of cobalt, another mineral necessary for its production, are mined. This so-called "energy transition" will only cause an increase in the "sacrifice" areas that capitalism requires to sustain its model of private consumption and enrichment.

The "energy transition" promoted by green capitalism has an inseparable relationship with the mining sector. In a recent World Bank study, it is estimated that the production of minerals such as graphite, lithium and cobalt will need to grow by 500% by 2050 to meet the needs of the so-called energy transition on a global scale. The production of electric batteries such as those manufactured by Tesla, could generate an increase in the extraction of up to 250 million tons of minerals (mainly graphite, nickel and cobalt) between now and 2050. This overwhelming increase in mining activity for the “energy transition” is not limited to the consumption of these minerals, but also includes other more common ones such as copper, aluminum, silver or lead, necessary in large quantities for the installation, for example, of solar or wind farms. Governments, development banks and companies are hedging their bets in the face of the problem posed by climate change by focusing on this deceptive "energy transition", which favors and encourages mining extractivism, which has been one of the most predatory and problematic activities in terms of socio-environmental impacts. The actors responsible for the serious environmental situation in which we find ourselves cynically promote themselves as the saviors of the planet with their technological proposals for green or climate-smart mining.

Enough with deceiving people and public opinion with these false "green" exits! Their proposals for the "energy transition" do not represent any change in the model and repeat the same colonial structures and capitalist accumulation that the mining industry reproduces in the world. How can one speak of a transition, when what is sought is an accelerated increase in mining extraction, for the increase in the profits of these companies who only generate dispossession and impacts on peoples and communities? It is the same capitalist model, which is now being painted green.

Red Mexicana de Afectadas/os por la Minería (REMA)

See original post in Spanish here.