(Yicai) June 27 -- Ganfeng Lithium has filed an international lawsuit against the Mexican government for violating an investment protection treaty with China, after the Chinese mining giant bought the development rights to the world’s biggest lithium mine from the UK’s Bacanora Lithium, and is demanding compensation.

The Mexican government has violated the investment protection agreement with China by canceling its mineral concessions in the Sonoran Desert, Ganfeng Lithium said on June 25, citing the arbitration proceedings it recently filed at the International Centre for Settlement of Investment Disputes. The Xinyu-based firm is requesting that Mexico pay compensation for the losses suffered, including accrued interest, and bear all related arbitration costs.

Ganfeng Lithium paid GBP190 million (USD239.7 million) in August 2022 to take over London-based Bacanora Lithium which was developing the Sonoran Lithium Project with reserves of around 8.8 million tons of lithium carbonate. Once Phase 1 was completed, the mine was expected to produce 20,000 tons of lithium hydroxide a year.

However, a year later, the Mexican government revoked nine of the mineral concessions in the project as part of a new drive to nationalize the country’s lithium reserves amid soaring global demand.

The arbitration proceedings have been registered at the ICSID, but no hearing has been set. Whether any compensation will be paid and how this will impact the company’s profits has yet to be determined.

Ganfeng Lithium is taking a long-term view and will continue to negotiate with the Mexican government, Beijing News reported, citing a company insider. The mining giant will keep developing its projects in other countries, such as Mali and Argentina, and will try to mitigate the risk of overseas investment through diversity.

Editor: Kim Taylor