Posted on 26 Jun 2024
Chinese miner Ganfeng Lithium has logged an arbitration case against Mexico with the World Bank’s International Centre for Settlement of Investment Disputes (ICSIC), Kallanish reports.
The proceeding was filed on 21 June in the name of Bacanora Lithium Limited, Sonora Lithium Ltd and Ganfeng International Trading Co. Ltd. It refers to violation of agreements related to the Sonora project and mining rights in Mexico, following the government’s decision to nationalise lithium assets.
According to a statement by Ganfeng Lithium, its subsidiaries request Mexico to compensate the damages they suffered as a result of the country’s breach of agreement, including interest. Additionally, Mexico should pay all related arbitration costs and expenses.
As the written hearing stage of the arbitration is yet to start, no decision has been made so far on the compensation request. There is still uncertainty about the impact of this arbitration on Ganfeng’s earnings.
The above-mentioned agreements include the agreement between the government of the People’s Republic of China and the government of the United Mexican States on the Promotion and Reciprocal Protection of Investments (China-Mexico BIT) and the agreement between the government of the UK and the United Mexican States on the Promotion and Reciprocal Protection of Investments (UK–Mexico BIT). The Sonora project was originally owned by Bacanora, a British firm.
The dispute stems from the Mexican government’s cancellation of the concession rights of Ganfeng Lithium’s nine lithium mining projects as part of its nationalisation movement in 2022.
In April, Ganfeng Lithium said the decision made by Mexico’s Ministry of Economy to maintain the original Mexican Mining Directorate’s order to cancel mineral concessions was not final according to Mexican law.
The northern Sonora project is the country’s most advanced lithium mining project, and could be a major source of North American lithium supply. Under the Mexican nationalisation plans, private firms can exploit the metal in partnership with new state-owned miner LitioMx.
Source:Kallanish
