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Portugal’s White Gold Rush: Lithium

Portugal’s White Gold Rush: Lithium -
Portugal’s White Gold Rush: Lithium - Portugal Business News

Portugal’s White Gold Rush, Lithium mining, is driven by the demand for Green Energy. Lithium is a critical raw material for the ongoing energy transition.

Portugal’s Prime Minister just announced a joint Portugal-Spain energy storage facility that will help overcome the severe energy crisis that is exacerbated by the record-breaking drought. This announcement, made in the wake of multiple crises in Europe, is leading to a White Gold, Lithium, rush to Portugal. The Iberian Peninsula will become strategically important to Repower the EU since the newly announced trilateral agreement with France that will lead to the creation of a Green Energy Corridor. The Corridor will interconnect Portugal and Spain to Marseille and to the rest of Europe.

Since the announcement of the European Commission’s plans to create strategic reserves in order to prevent disruptions in the supply-chain, lithium is in the spotlight. It is now seen as strategically important for the EU and this has led to the European Critical Materials Act, that will be the driving force in the making of a new EU lithium powerhouse.

The International Energy Agency (IEA) expects the current lithium demand to grow exponentially. The demand for batteries is a major engine of growth and is leading to a situation where demand is exceeding supply and prices are rising.

Portugal’s White Gold reserves are 60,000 tons. Portugal ranks 9th in the Top 10 countries with the largest lithium reserves. However, China has a monopoly of rare earths reserves, followed by the United States, Japan and South Korea. According to Benchmark Mineral Intelligence, Lithium Spot Prices have risen by 900% since January 2020. China is the global manufacturing powerhouse since it owns 60% of the global supply for processed lithium.

Amidst the call for Green Energy solutions for sustainable development, there is a rising demand that is not met by investors. The CEO of Benchmark Mineral Intelligence underlined the difference between mining capacity and the quality of the final product, as the production of lithium batteries requires specific technology. This is why the supply of battery-grade material is a difficult process that may not be met by a simple mining strategy.

Portugal’s approach does not only rely on mining lithium but also on a fully integrated value chain to produce batteries for the EU automotive sector. The linkages between lithium batteries and electric vehicles are taken into account by including the Portugal Automotive sector in the development plan.

Galp and Northvolt have announced a Joint Venture, the Aurora project, that will become Europe’s largest lithium refinery. Setúbal was the site selected for the facility since it is close to Portugal’s car manufacturing center. The plant will be in the Sapec Bay Industrial Park as it has good access to railway and port facilities. This will lead to an integrated approach from mining to processing, to batteries being used for manufacturing electric vehicles in the same region. The Aurora plant will be located only a five-hour drive away from the Barroso Lithium project. The facility will produce the amount of lithium hydroxide needed for 50 GWh of battery production per year. 50% of the plant’s capacity will be used for battery manufacturing. With this expected output, Portugal will be able to produce over 700,000 electric vehicles. According to Statista, the Electric Vehicles market in Portugal is projected to grow by 23.68% (2022-2027) resulting in a market volume of US$6.17bn in 2027.

Moreover, the Portugal-Spain energy storage facility will lead to the development of large capacity batteries to store energy. Portugal’s Prime Minister just announced the Portugal-Spain energy storage facility that will strengthen the electricity grid within the Iberian market. This new announcement is due to the fact that the main challenge in the energy transition is how to store the energy produced.

Hydrogen is another way to store energy from renewable sources and Portugal is positioning itself as a Green Hydrogen hub, where the energy used to produce hydrogen will come from renewable sources. While Sines in Portugal is set to become the new Hydrogen Valley, the energy storage partnership with Spain will further enhance the usage of natural resources on the Iberian Peninsula. This will include lithium for producing large-capacity batteries that will be used to store energy on a large-scale. The stored energy will be used to respond to an energy crisis situation. This is critical since Portugal is facing a severe drought and has less capacity to produce hydroelectricity.

The Green Energy Corridor includes plans for building a pipeline for green hydrogen in the long-term, while being used temporarily for the transport of natural gas. New announcements are expected following the trilateral meeting to be held in Spain on the 9th of December when Portugal, Spain and France will meet to further discuss the project.

Spain and Portugal together represent a market of around 30 million cars and the share of Electric Vehicles (EVs) is growing rapidly, accounting for 10% of new car sales. Since EV charging and hydrogen are two high-growth energy transition businesses, major industry players BP and Iberdrola have announced that they will partner in Portugal and Spain to produce the first 5,000 fast charging points that are planned to be in operation by 2025. They believe that the outlook for energy transitioning on the Iberian Peninsula is sunny and that this will play a critical role in their transformation from international oil companies to becoming integrated energy companies.

Portugal has an important role to play in the EU’s battery and electric mobility ecosystem, having the capacity to mine, to refine and to supply lithium. The Savannah Resources “Barroso Lithium Project” in the northeast of Portugal contains the largest lithium resource in Western Europe. Savannah Resources aims at building Western Europe’s largest lithium mine in Portugal and the company is expected to submit its project by mid-March 2023 for consideration by the Portugal government. The project is to develop a resource of around 27 million tons of lithium and the company believes that this will be enough to supply a significant share of Europe’s lithium demand over the coming decades.

Portugal is already Europe’s top lithium producer, the supply accounting for about 11% of the global market. However, its output is entirely used to make ceramics and Europe imports the White Gold from China, Australia and Latin America’s Lithium Triangle.

Portugal’s government is now studying the potential of issuing Green Bonds to fund Green projects such as renewable energy. Rui Amaral, who is a board member at the Portuguese Debt Management Agency IGCP, said that the size of an issuance would need to be benchmarked, but that it would be around 3 billion Euros. In line with the funding potential, Portugal will have to identify Green projects to fund. On the other hand, the EU plans to fund a third of the recovery plan through its own Green Bonds that will finance member states’ Green projects.

While Europe eyes the White Gold Rush to Portugal, it remains to be seen if the demand for Green Energy will lead to the creation of a lithium industry in the country’s renewable energy portfolio.


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