On June 25th, Ganfeng Lithium (002460.SZ) announced that the Mexican Ministry of Mines has revoked nine mining concessions for its Sonora lithium clay project. In response, Ganfeng’s subsidiaries—Shanghai Ganfeng, Bacanora, and Sonora—initiated arbitration proceedings with the International Centre for Settlement of Investment Disputes (ICSID) in May 2024.
Recently, Ganfeng Lithium received confirmation from ICSID that the arbitration case has been officially registered, with related information posted on ICSID’s website.
According to Ganfeng Lithium, the Sonora lithium clay project, located in Sonora, Mexico, combines the benefits of both ore and brine lithium extraction methods. This allows for rapid lithium extraction at low costs. An SRK Consulting (UK) Limited report estimates the project’s total lithium resources at approximately 8.82 million tonnes of lithium carbonate equivalent.
In August 2023, the Mexican Ministry of Mines issued a decision canceling the nine concessions for the Sonora project, effectively prohibiting Ganfeng from operating the project in Mexico.
Following the notification, Shanghai Ganfeng and its Mexican subsidiaries sought an administrative review from the Mexican Ministry of Economy, challenging the decision. However, in November 2023, the Ministry upheld the original cancellation.
In January 2024, Ganfeng’s Mexican subsidiary filed an administrative lawsuit with the TFJA, requesting the annulment of the cancellation decision, which is still pending resolution.
In May 2024, Ganfeng’s subsidiaries filed for arbitration with ICSID, arguing that recent Mexican legal measures effectively nationalized lithium resources, disrupting the project’s operations and leading to the cancellation of their concessions.
The arbitration request cites the China-Mexico Bilateral Investment Treaty (BIT) and the UK-Mexico BIT, seeking compensation for damages caused by Mexico’s actions, including interest and all arbitration costs.
As of June 25th, the ICSID Secretary-General has officially registered the arbitration case. The next steps involve forming an arbitration tribunal and presenting the parties’ positions in written and oral phases. The case is currently awaiting trial and adjudication.
