Mario Cruz/ Lusa

Galp and Northvolt confirm partnership to construct Europe’s largest lithium plant in Portugal – but it may not be in Sines

Today was the day for the official announcement of the €700 million Galp- Northvolt joint venture agreement to build Europe’s largest lithium plant in Portugal.

Yesterday everything pointed to the site being chosen in Sines. Now this is not so clear.

Indeed, reports suggest the government believes the plant would be better sited in the north – bearing in mind the location of the country’s largest lithium reserves.

For now, we’re told the project is called Aurora and is targeting annual production of 35,000 tonnes of battery-grade lithium hydroxide, enough for 50 GWh of battery capacity, which could power about 700,000 electric vehicles. 

The plant will create as many as 1,500 jobs, the companies have said. 

“The joint venture hopes to source the lithium for the project from the Iberian peninsula and is aiming to use renewable energy to power the refinery, which is aiming to start commercial operations in 2026 once a final investment decision is taken”, writes the Financial Times. 

“This is a once-in-a-generation opportunity to reposition Europe as a leader in an industry that will be vital to bringing down global CO2 emissions,” said Galp’s chief executive Andy Brown. 

Galp, already one of the biggest solar power generators in Spain and Portugal, has recently jumped onto the ‘clean energy bandwagon’ while the demand for lithium is forecast to grow by as much as 4,000% by 2040, according to the International Energy Agency.

The greatest ‘stumbling block’ however is China’s dominance when it comes to refining lithium. China refines 60% of the world’s supply – thus the pressure to build processing plants in Europe.

Northvolt is backed by big name investors like Goldman Sachs, BMW and IKEA. It will be opening its first factory in northern Sweden this month and has an extensive partnership agreement with German car manufacturer Volkswagen.

As the FT report explains, the company has agreed to purchase half of the joint venture’s production for use in its battery manufacture, while the government hopes to use national mineral deposits to build an ‘end-to-end lithium-chain’ to supply the electric vehicle industry in Europe, “which at present imports almost all its battery-grade lithium from outside the EU”.

The plan is not consensual: communities in all areas earmarked for lithium exploration are adamant that mining will have a massively detrimental environmental impact. Demonstrations and petitions have taken place and been raised since the focus on lithium began. But the government’s intentions remain clear. Environment and energetic transition minister João Pedro Matos Fernandes has said today that “it is very normal that a lithium processing plan should be sited in Portugal. It is truly an innovative project…”

Today’s presentation was the second announcement about a lithium refinery in Portugal this week.

On Monday Bondalti Chemicals and Reed Advanced Material unveiled plans to build a 25,000-tonne-a-year processing plant at Bondalti’s site in Estarreja.

Nik Völker, from MiningWatch Portugal – a pivotal group in terms of uniting populations against lithium exploration – has remarked : “Both the affected community and ourselves continue to be estranged by the way both the Portuguese government, industry alliances, and the European Commission providing the post-Covid recovery funding continue to put the cart before the horse. Apart from the vague intentions presented today, the only lithium mining project in Portugal, Savannah Ressources’ Mina do Barroso project, was so far unable to prove the economic feasibility of its operation. Also, it continues to lack approval from the environmental agency, including the serious security issues recently highlighted by hydrologist Dr. Steven Emerman before the EU parliament, which would turn the mine’s upstream tailings dam proposal illegal in China or South America (click here).

“ It seems unlikely that the investment announced by Galp and Northvolt would benefit the Barroso region in the longer term, besides the unrefined lithium ore sales during 12 years of open pit extraction. Raw materials exported to the other end of the country, afterwards being left with a hole in the ground and its possible environmental legacy, as well as with a new rural exodus due to deindustrialization, it is comprehensible that both the affected municipality of Boticas and the local community continue to oppose the project, also in rejecting property sales offers by the British investment company.”

Seen from another angle, there are often grand announcements of investment at times of key political moments in this country’s recent history.

For example, the ‘huge investment’ in a second airport for Lisbon at Montijo was trailed before the 2019 legislative elections as a sign that PS Socialists were making a decision that had been “delayed for decades at a cost to the country that is unquantifiable”.

The €1.3 billion deal was going to create 10,000 new jobs and be up and running by 2022 (click here). That date is almost upon us and not one thing has moved forwards: indeed President Marcelo has said the first item on the agenda of the new government in February 2022 will be to decide how to move forwards on Lisbon’s second airport – on the basis that climate change is likely to render Montijo unviable by 2050 (click here) – and environmental impact studies have successively trashed the location as a viable site for Lisbon’s second terminal (click here).

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