Energy Transition Under the New NAFTA: Challenges in the Critical Minerals Supply Chain

Authors

  • John Hayes
  • Alem Cherinet

DOI:

https://doi.org/10.11575/sppp.v16i1.77426

Abstract

Demand for critical minerals, battery metals, and the nearshoring of electric vehicle (EV) manufacturing have implications for all trading partners of the updated North American Free Trade Agreement, now called the United States-Mexico-Canada Agreement (USMCA). North American EV manufacturing is driven by initiatives such as the battery belt in the US and Canada’s commitment to clean technology. Mexico, as a major auto-component manufacturer and producer of critical minerals, holds a significant role in supporting the regional supply chain. However, recent developments in Mexican natural resource policy, including the nationalization of lithium deposits and exploration moratoriums, present challenges for foreign miners operating in Mexico, including the risk of future limited participation in the mining sector.

Canadian miners hold a dominant role in Mexican mineral exploration, and Mexico is Canada’s third-largest trading partner. The political landscape in Mexico, with the ruling Morena party controlling both the national government and majority of state governments, further complicates the situation. Policy changes in 2023 to the mining sector’s regulatory requirements are the most significant reforms to the sector since the early 1990s. The reforms are in response to prominent, long-standing grievances from various non-industry stakeholders and seek to mitigate against future negative social and environmental impacts of mining. The reforms include shorter mining concession permits, stricter environmental impact assessments, and new permitting procedures on water use.

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Published

2023-07-06

Issue

Section

Briefing Papers