Portugal could next year approve lithium mining that would reduce Europe’s dependence on outside sources for a key ingredient in the frenetic global race to decarbonize the auto industry.
The southern European nation is thought to have the continent’s largest lithium reserves. Alongside nickel and cobalt, lithium has become a prized raw material as it is a vital element in the production of electric vehicle (EV) batteries.
Demand is soaring as manufacturers scramble to produce low-emission fleets and governments seek to phase out fossil fuel-powered vehicles in the battle against climate change.
Portugal’s environment regulator is to deliver its verdict on the approval of a major new lithium mine in the north of the country early next year.
With lithium mostly mined in Australia and South America, while China dominates the supply chain, the regulator’s decision could bolster Europe’s independent supplies of the coveted resource.
China — simultaneously viewed as an economic rival and partner in many Western capitals — controls more than 40 percent of global lithium production and almost 60 percent of global lithium refining capacity.
That could change if a deal between Portuguese oil firm Galp Energia SGPS SA and Swedish electric battery maker Northvolt AB bears fruit. The two companies earlier this month sealed a deal to set up one of Europe’s largest lithium refineries in northern Portugal.
Costing an estimated 700 million euros (US$792.58 million), the facility would process enough ore to produce batteries for about 700,000 electric vehicles per year by 2026.
However, Galp and Northvolt intend to secure lithium supplies from British mining firm Savannah Resources PLC, which says it holds one of Western Europe’s largest lithium deposits in northeastern Portugal, but must await the regulator’s decision next year.
Savannah has said that the deposit could provide enough lithium for up to 600,000 electric vehicles per year for 10 years.
Portuguese company Lusorecursos this year also submitted an environmental impact study to open a second mine in a neighboring municipality that would have its own refining facility.
A “white gold rush” for lithium in Portugal follows Canadian group Rock Tech Lithium Inc’s decision to invest 470 million euros in a German lithium plant from 2024.
Portuguese Minister of Environment and Spatial Planning Joao Pedro Matos Fernandes welcomed the mining sector’s buoyancy and said that the government founded its industrial strategy on Portugal’s natural resources.
However, a much-delayed tender for prospecting rights for eight other potential deposits would only begin after legislative elections on Jan. 30, he added.
Europe’s dependence on outside sources for lithium comes amid growing demand partly fueled by an auto industry scrambling to decarbonize.
The global auto industry produces more greenhouse gas emissions than the whole of the EU, the World Economic Forum has said.
The International Energy Agency estimated that global demand for lithium would increase by 42 percent from last year to 2040.
This demand is driving technological innovation to increase extraction capacity.
Chemicals company Bondalti this month announced it had teamed up with Australian firms to test a new refining technology which would treat lithium extracted from South American brine.
Other developments could even see lithium extracted from Portugal’s granite-rich northeast and add to a European lithium bonanza.
While lithium might help decarbonize the automotive industry, its extraction and refining are not without an environmental cost, and the projects have caused concern.
“The exploitation of lithium cannot become a national enterprise that would allow us to extract in any way or at any price,” said Nuno Forner, policy officer at environmental non-governmental organization Zero.
Forner did not rule out the environment regulator reaching a “surprise” verdict, but expected it to approve Savannah’s project under certain conditions.
In Covas do Barroso, a remote northern municipality famed for its beef where Savannah’s mine is to be sunk, the project has caused consternation.
“We already know that it’s the political and economic powers who decide,” said Nelson Gomes, president of a local pressure group.
He said the mine would “destroy agricultural land, re-route streams and create enormous slag heaps,” and vowed to “do everything” to stop it.
Savannah chief executive officer David Archer said the company had planned 238 measures to “eliminate or minimize” the project’s impact involving investment of about 15 million euros.
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