China’s Ganfeng sues Mexico over lithium permit

China’s Ganfeng and two of its subsidiaries in Mexico have initiated an arbitration case against the country’s government over a cancelled mining concession for an advanced lithium project in the state of Sonora.

The World Bank posted the request on Friday by Ganfeng’s Bacanora Lithium and Sonora Lithium, a mining and processing giant in China. The Washington, D.C.-based bank’s dispute settlement centre, the International Centre for Settlement of Investment Disputes, is to hear the case.

The dispute centres on the governments’s decision last August to cancel Ganfeng’s concessions. That move followed then-President Andrés Manuel López Obrador’s nationalization of Mexico’s nascent lithium industry in 2022.

In 2021, Ganfeng acquired Bacanora Lithium, which was in the midst of a mine development worth US$800 million. The company’s goal at the time was to kick off commercial production in 2023. But Mexican legislators approved a bill in April 2022 granting the state full authority over lithium mining and activities were halted.

While the industry backed Ganfeng saying the government could not lawfully cancel licences, Mexico’s economy ministry upheld the original decision after the approval of the bill regulating mining and water concessions.

The Sonora project comprises an open-pit mine and processing facility expected to produce 35,000 tonnes of lithium annually. It would provide the country with a domestic source of the battery metal for its rapidly growing electric-vehicle supply chain.