Portugal's Galp takes 10% stake in Savannah Resources' lithium mine
LISBON, Jan 12 (Reuters) - Portuguese oil and gas company Galp has entered the race for lithium exploitation, striking a deal with Savannah Resources for a 10% stake in a lithium-rich mine the London-listed company owns in the north of the country.
Portugal is Europe's biggest lithium producer, but its miners sell almost exclusively to the ceramics industry and are only now preparing to produce higher-grade lithium that is used in electric cars and to power electronic appliances.
Galp's investment, worth 5.2 million euros ($6.4 million), is an important step in securing financing for the project and in boosting the development of a fully-fledged lithium battery value chain in Portugal, Savannah Resources said. "(Galp's) knowledge and experience will be invaluable to Savannah ... they have a wealth of experience in developing large-scale projects such as this," David Archer, Savannah's chief executive, said. A Galp spokesman confirmed the initial agreement but did not give further details.
Galp and Savannah also intend to work on an agreement, known as a future offtake contract, giving Galp rights to up to 100,000 tonnes of spodumene lithium concentrate per year - around 50% of the mine's total expected production. The mountainous region of Barroso, declared a world heritage site for agriculture in 2018, is one of many areas in northern Portugal that is rich in lithium - so-called "white gold." Portuguese company Lusorecursos also holds a mining licence in the region.
A long-awaited international tender to determine who would secure rights to the country's lithium-bearing territory, estimated to contain enough lithium for 3.3 billion euros worth of investment, was due to proceed in early 2020 but was delayed because of the coronavirus pandemic. But lithium projects in Portugal are facing strong opposition from environmentalists and local communities, demanding stronger regulation and more transparency.
A new law designed to allay these concerns by tightening rules on future licences is awaiting final approval from the country's President, environment minister Joao Matos Fernandes told Reuters in Brussels last week. (By Sergio Goncalves and Catarina Demony, Additional reporting by Kate Abnett; Edited by Victoria Waldersee and Jane Merriman)Messaging: email@example.com))