Lithium | Galp and Northvolt to Postpone Joint Investment in Lithium Refinery

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Lithium | Galp and Northvolt to Postpone Joint Investment in Lithium Refinery

Date：2024-10-29

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Keyword tags： Lithium Europe Northvolt

Filipe Silva, CEO of Portuguese oil and gas company Galp, recently stated that due to challenging market conditions, the joint venture between Galp and Swedish battery manufacturer Northvolt to build the Aurora battery-grade lithium hydroxide refinery project in Portugal will be delayed.

Galp and Northvolt established a lithium refining joint venture called "Aurora" in November 2021 with a 50:50 ownership ratio. The lithium refinery was to be constructed in the Portuguese port city of Setúbal, with an expected investment of over 1 billion euros. The original plan was to make a final investment decision (FID) by the end of 2024 and to commence commercial operations in early 2026, with an initial annual production capacity of 35,000 metric tons of lithium hydroxide, sufficient to support the production of 50 GWh of batteries and power approximately 700,000 electric vehicles. However, the lithium project faces delays due to its complexity, uncertainty in subsidy funding, and changes in the lithium market.

Portugal has known lithium reserves of about 60,000 tons and is currently the largest lithium producer in Europe, although its traditional lithium mining has primarily been for the ceramics industry.

Northvolt originally planned to establish a local European battery supply chain through the Aurora lithium project, with the refinery supplying 50% of the company's future lithium salt needs, thereby mitigating geopolitical risks. Volkswagen is the majority shareholder of Northvolt. However, Northvolt's ambitious plans have recently encountered some setbacks: in July, BMW canceled a $2 billion order with Northvolt following production delays; on September 23, Northvolt officially announced plans for business contraction and layoffs, and on October 8, Northvolt Ett Expansion AB, Northvolt's subsidiary responsible for battery expansion projects, filed for bankruptcy with the Stockholm District Court.

It is reported that the previous Portuguese government planned to auction lithium exploration licenses for six areas in the north and center of the country, but concerns about environmental and social impacts have led to multiple delays in the auction, initially planned for 2018. The center-right Portuguese government, which took office in April, is finalizing a strategic plan to explore raw materials critical to the green transition, where copper may play a more significant role than lithium.

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