Portugal’s lithium, possible driver of the electric car revolution in Europe

The Portuguese environmental regulator will determine next year whether Europe will have a large reserve of lithium, one of the key ingredients in the global race for the electrification of the Automotive industry.

Portugal is suspected to be home to the largest reserve of this mineral in Europe. Along with nickel and cobalt, lithium is a precious raw material, essential in the production of electric batteries for vehicles.

Demand is booming as manufacturers try to produce low-emission fleets and governments seek to stamp out fossil-fueled vehicles amid the battle against climate change.

But the lithium mines are located mainly in Australia and South America and it is China that controls the distribution chain. The Portuguese deposits are an opportunity to reduce European dependence on other powers.

Lithium fever

Portuguese oil firm Galp Energia and Swedish electric battery producer Northvolt this month closed a deal to build one of Europe’s largest lithium refining plants.

At an estimated cost of 700 million euros (US $ 787 million), this facility in northern Portugal would allow enough material to be processed to annually produce batteries for 700,000 vehicles in 2026.

For this they are supplied by the British miner Savannah, which claims to have one of the largest lithium reserves in Western Europe in northeast Portugal and is awaiting approval from the regulator.

The Portuguese company Lusorecursos also presented an environmental impact study to open a second mine in that area that would have its own refining plant.

This “white gold rush” for lithium in Portugal comes after the Canadian group Rock Tech Lithium decided to invest 470 million euros (US $ 530 million) in a lithium plant in Germany from 2024.

All these projects seek to boost independent reserves in Europe of a strategic resource of which China controls more than 40% of world production and almost 60% of global refining capacity.

The International Energy Agency estimates that the demand for this resource will increase by 42% between 2020 and 2040, in part stimulated by the electrification effort of the automotive industry.

The increase in demand goes hand in hand with greater investment in technology to improve production capacities. This month, for example, Portuguese chemist Bondalti announced an agreement with Australian companies to test a new refining method for lithium mined from South America.

Increasing demand

The Portuguese Minister of the Environment, Joao Pedro Matos Fernandes, celebrated this good moment and assured that the government bases its industrial strategy on the natural resources of Portugal.

However, the delayed bidding for prospecting rights to eight potential deposits will not begin until after the January 30 legislative elections, he said.

It will also have to wait until early 2022 for the Portuguese regulator’s verdict on the Savannah mine.

Although it seems paradoxical, the extraction of this essential resource for the ecological transition also raises environmental concerns.

“The exploitation of lithium cannot become a national strategy that allows us to extract it in any way and at any price,” says Nuno Forner, from the environmental NGO Zero.

This activist does not rule out a “surprise” decision by the regulator, although he hopes that it will approve the project with certain conditions.

In Covas do Barroso, a remote town known for its beef where Savannah’s lithium mine is planned, the project caused consternation.

“We already know that it is the political and economic powers who decide,” says Nelson Gomes, president of a local pressure group against the project.

For him, the deposit “will destroy agricultural land, divert streams and create piles of waste.”

The executive director of the mining company, David Archer, assures that the company contemplates 238 measures to “eliminate or minimize” the impact of the project, with an investment of about 15 million euros (US $ 17 million).