Portugal Raises the Stakes in the Lithium Market

MINEX Forum | May 7, 2019 | Views: 80 | Source: Mining SEE

Portugal plans to open a lithium licensing auction in May, as part of an ongoing bid to expand their lithium production, streamline their refinement process, and become a major power in the global energy market.

Starting in May, Portugal plans to launch an international auction of lithium exploration licenses. Bidders would be expected to commit to building a local lithium refinery, which would in turn mark Portugal as a major player in the international renewable energy market.

Portugal’s energy minister, Joao Matos Fernandes, told Parliament that eight regions had already been selected for this auction, and a potential ninth region is under review for addition. Various international groups have already expressed interest in exploring for lithium in Portugal.

“We really want to launch this auction in May. The…contracts will make it very clear that a concession contract will only be awarded to those who build a lithium refinery, or associate themselves with an existing (refinery) project”, he said.

The auction was originally slated to take place last year, and is part of ongoing efforts to make Portugal Europe’s top lithium supplier, a market that is growing, due to its use in renewable energy technology, and Europe’s growing appetite for electric vehicles.

This market is a hot one. A government study last year put the potential investment in five of the most attractive lithium-bearing areas, at 3.3 billion euros. Already, in December of last year, Portugal’s government set up a working group to determine how the rare metal can be better produced and processed within Portugal.  Also, how they can foster technology to better unlock lithium’s industrial potential, including in the reusable energy sector. Financing for these projects could possibly come from the EU-funded COMPETE programme.

Technically, Portugal is already Europe’s largest producer of lithium (and the world’s sixth-largest), but it accounts for less than 15 per cent of Europe’s total consumption. In fact, nearly all of Portugal’s lithium supply is used for ceramics and glassware, not electronics. The majority of lithium imported into Europe hails from China, Chile, and Australia. That is because it is significantly cheaper to refine and import lithium from these countries than to extract it from Portugal’s granite. With these auctions, Portugal is looking to address that issue, and make domestic lithium production more economically viable.

Of the mining projects currently underway, the Mina do Barroso lithium project will be solely owned by the UK-based multi-commodity developer Savannah Resources, via an all-share offer worth nearly eleven million euros. Currently, Savannah Resources owns only 75% of the project, and hopes that full ownership will provide greater exposure of the product to its shareholders. Mina do Barroso is arguably one of the most advanced lithium mining concessions in all of Europe, and is expected to become Europe’s first significant producer of spodumene, which is a hard-rock form of the mineral.

The mine is estimated to hold particularly excellent lithium, well suited for the lithium ion batteries – including the ones that will be present in ever greater numbers in electric vehicles.

At first, lithium extractions will be sent to China for refinement, but the mine is also expected to yield feldspar and quartz for the ceramics industry, both in Portugal and in neighbouring Spain.

Savannah’s CEO David Archer noted, that the move to acquire sole ownership of Mina do Barroso, was being made at a time when “legislators and battery end users in the region have come to appreciate the need for Europe to have domestic sources of battery raw materials, as the region seeks to reduce emissions from the transport sector via the transition to electric vehicles”.  “Late 2019 for a production start, is an aggressive target for Savannah, but also one which the company thinks is achievable.”

Meanwhile, Fortescue Metals Group, an Australian iron ore company, is also focused on either prospecting a lithium mine of its own, or failing that, buying into an established lithium project. To that end, the company has applied for tenements in Portugal, covering about 7,000 square kilometers it considers likely prospecting ground.

Chief Executive Ms. Gaines, recently said that  “Portugal is elephant country, as well [as Western Australia.] We are still hunting for elephants in elephant country”.  The turn of phrase  “Hunting for elephants in elephant country”, is used to discuss prospecting for lithium in especially likely places.

Lepidico has also announced that there was a 210 percent increase of lithium at Alvarroes, a whopping increase from their original estimates. While the average overall grade of the lithium extracted has been reduced, due to the inclusion of lesser material, the general quality of the product remains high.

Lepidico Managing Director Joe Walsh said, “This significant increase in the lithium mineral resource confirms Alvarrões as a considerable deposit of Li-mica mineralisation. Mining studies have commenced with the objective of delineating the project’s first Ore Reserve estimate later this quarter, which will contemplate the expansion of the mine, and development of a small scale mineral concentrator within the Alvarrões mining lease area.”

Some are even hoping that American manufacturer Tesla, will set up shop locally. While this is something of a long shot, the odds for such an occurrence are higher if there is a lithium processing facility already operating in Portugal – making it more attractive to the company to locate there. To boost the idea, local authorities, and 46,000 people signed the “Bring Tesla to Portugal” petition.

Portugal did receive a delegation from Tesla, in November 2018, and the Port of Sines, with its links to Spain and high sun exposure, make it an attractive location for the potential Tesla factory. However, behind-the-scenes negotiators did mention that it is ultimately unlikely that Tesla will create its electric car and battery manufacturing “giga-factory” in Portugal. Other European locations currently under considerations include the Czech Republic, Poland, and Hungary.

Long shot or not, it’s clear that Portugal is making strides to position itself as a major player in the energy market, both regionally and globally.

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