Mexico Requires a Mining Industry Model for Energy Transition

The Peasquito mine, owned by Newmont Goldcorp and located in the northern Mexican state of Zacatecas, produces gold, silver, lead, and zinc, the latter two of which are critical for the energy transition. Image Credit Dailyherald

The discussion in Mexico and on a worldwide scale is focused on resources important to the energy transition, such as cobalt, lithium, and nickel. However, there are several important minerals that remain in the background.

Aside from lithium deposits, Mexico possesses proven resources of bismuth, copper, fluorspar, graphite, molybdenum, and zinc, all of which are involved in various phases of the transition to a low-carbon economy.

Beatriz Olivera, the founder of the non-governmental organization Energy, Gender, and Environment, emphasized that Latin America's second-largest economy holds the mining capacity to facilitate this shift.

"But we have an extractive model, the mineral is mined and developed elsewhere," she added, criticizing Mexico's current mining regulations, particularly the elements that take on special importance on the route to energy decarbonization, a formula for mitigating global warming.

"Where is the value chain, and where is the advantage for countries like Mexico, if these minerals are extracted? We will only be left with the negative results, and sacrificial zones will be established to satisfy technologies in other parts of the world "In an interview with IPS, she stated.

Olivera is a co-author of forthcoming research on Mexico's strategic transition metals, which highlights 23 minerals for use in electrical infrastructure, solar and wind power plants, and energy storage devices like batteries.

The committee identified 803 mining projects, 237 of which have a mineral given in concession that can be used in the transition, the majority of which are dormant but still in force.

Almost half are in the early stages, over a third are in exploration, 13% are in pre-production, and the remainder is in pre-feasibility, expansion, or closure.

Meanwhile, 58 of the businesses are owned by firms from Canada, 29 from Mexico, 26 from the United States, seven from Australia, three from the United Kingdom, and one from China, with the provenance of the company unknown in 113 cases.

Only 10% of Mexico's territory has been granted under concession for mining activities, despite the fact that these resources are found virtually everywhere in the country. Several of these minerals are critical to the transition to a low-carbon economy. Map: Mexican Ministry Of Economy

The mining portfolio of Mexico

Mexico is currently the world's biggest silver producer and a prominent player in the market for 12 minerals.

In 2020, the country ranked second in the world in fluorspar output, fifth in bismuth, molybdenum, and lead production, sixth in zinc, ninth in copper and tenth in manganese production.

According to the official Statistical Yearbook of Mexican Mining, Mexican resources produced 1.07 million tons of fluorspar, 732,863 tons of copper, 688,461 tons of zinc, 260,390 tons of lead, 198,448 tons of manganese, 18,562 tons of molybdenum, and 1844 tons of graphite in 2020.

According to independent expert José Parga, the country contains 38 clay deposits including lithium, potassium, magnesium, and sodium, at least ten of which contain five billion tons of these minerals, but its extractive and economic potential have yet to be determined.

The US Geological Survey (USGS) estimates that Mexico possesses 1.7 million tons of lithium deposits.

The nationalization of lithium and the establishment of a state-owned mining firm is part of the government's proposal for an energy system in an effort for the public sector to reclaim control of this industry.

According to the USGS, Mexico possesses reserves of 53,000 tons of copper, 68,000 tons of fluorspar, 5,000 tons of manganese, 5,600 tons of lead, and 19,000 tons of zinc.

The mining law in Mexico, which has been in operation since 1992, prevents state-owned businesses from mining found minerals, effectively privatizing the industry because the operation stays in their hands and the State only controls it.

Although there is no commercial exploitation of cerium, dysprosium, erbium, scandium, europium, gadolinium, holmium, ytterbium, yttrium, lanthanum, lutetium, neodymium, praseodymium, promethium, samarium, terbium, and thulium - the so-called rare earth, the set of 17 elements which have

Furthermore, zinc deposits could offer indium, gallium, and germanium, which are critical components for the energy transition but are not currently produced in Mexico.

The majority of the veins are found in the northern section of the country.

Gas Station image

Potential that is only partially utilized

Parga highlighted Mexico's vast untapped potential.

"There is a certainty that the materials are there," he told IPS, "but they have not been the subject of an evaluation that would allow us to truly grasp their potential and the eventual technical-economic viability of their use."

According to the expert, "the first stage in utilizing the country's mineral resources is to study their existence, quantify, and classify them in order to make the greatest possible use."

International groups have been warning for at least a decade about the consumption of raw materials for the energy transition, which could lead to their depletion or "peak consumption."

Furthermore, because of the environmental harm inflicted, the low number of local jobs provided, and the mining industry's modest contribution to the Mexican economy, the mining business has sparked demonstrations and resistance in communities across the country where it works.

In reality, there are now more than 50 confrontations in the country between local populations and mining companies.

The energy transition in Mexico has been stalled since 2019 due to President Andrés Manuel López Obrador's policies, which emphasize assistance for fossil fuels and hydroelectric power plants at the expense of renewable sources such as wind and renewable power.

However, this Latin American country lacks a national industry linked to the transition or a strategy for its growth, despite having a territory of 1.96 million square kilometers, 10% of which has been granted under concession to mining firms.

As a result, no wind turbines, solar cells, or electric cars are manufactured because the raw materials are exported and returned as components to construct solar panels or electric automobiles.

Slowly yet steadily

However, some initiatives have already been made in the Mexican market, such as the manufacture of electric units in Puebla, a central state near Mexico City.

In addition, the foreign ministry formed the U.S.-Mexico Electrification Working Group on Feb. 8, with backing from the University of California, with the goal of "ensuring a coordinated and strategic transition towards electromobility."

In 2022, the parties will create a binational roadmap that includes a diagnosis of both nations' automotive sectors as well as their electric transition potential. The term "electromobility" refers to the introduction of automobiles that run on electricity rather than fossil fuels and need the use of "transition minerals" in their production.

However, Mexico is continuing this project without the National Electromobility Strategy, which has been available since 2018 but has been suspended for "evaluation" by the environment ministry following the López Obrador administration's inauguration in December of that year.

Electric urban transport vehicles have been deployed in some cities, such as Mexico City, although they are not yet a countrywide trend. Furthermore, these units' energy is still derived from fossil fuels.

According to the private consulting firm TResearch Mexico, the marketing of new hybrid and electric cars has surged fivefold in Mexico since 2016. In 2021, those sales surpassed 39,000 units, accounting for 4% of total sales.

Mexico signed the Glasgow Agreement on Zero-Emission Vehicles, which was signed by 37 countries, 46 metropolitan and regional governments, 11 vehicle manufacturers, 28 fleet owners, 13 institutional investors in the automotive sector, two financial entities, and 21 signatories from other segments, between 2035 and 2040, to phase out the production of internal combustion vehicles.

According to data from the non-governmental Observatory of the Energy Transition in Mexico, fossil fuel-based generation accounted for 76 percent of total generation in January, followed by wind energy (7%), hydroelectric (6.67 percent), solar (4.4 percent), nuclear energy (3.87 percent), geothermal (1.55 percent), and biomass (0.07 percent).

Olivera and Parga raised concerns about the role of minerals in the energy transition in both Mexico and the rest of the world.

"They will not be sufficient to achieve the transition to 100% renewable energy; we must proceed with caution. We can't, however, keep burning fossil fuels left and right "Olivera stated.

"There must be advantages for people, with environmental and social restrictions, respect for people's collective rights, mitigating measures for socio-environmental consequences, and a fairer and more equitable distribution of rewards," she believes.

"Apart from maintaining ecological balance, safeguarding the environment, and preserving the cultural environment of individuals and communities," he stated, "it must also ensure that they receive an economic advantage that allows them to enhance their level of living."

The conflict centers around internal combustion automobiles, which have substantial economic, environmental, and health costs, and electric vehicles, which have a large carbon footprint.

Source: Ipsnews