Portugal holds significant lithium reserves, placing it in the top ten countries in the world with an estimated 60,000 metric tons.Martim Facada, the Lithium Market Reporter for Industrial Minerals, a publication that covers the global non-metallic minerals industry, says the current price of one kilogramme of lithium carbonate, as used in batteries, is around $23 - a "high price,” that Portugal can take advantage of.
"Portugal is still in a junior phase in the exploitation of lithium, but it has a lot of potential," with companies applying to government for 40 exploration licenses in the current mini-boom.
But Facada urges caution as this is a long-term business with production in Portugal starting, at very best, to produce lithium compounds used in the automotive industry, "in late 2019."
This is the target date announced by Savannah Resources, a British company that is exploring for the mineral in Trás-os-Montes.
"Once you start producing, you still need to sell the material to carbonate and lithium hydroxide plants if the company does not have its own factory," explains the analyst, adding that this is where Portugal can position itself.
"With high prices, investors are interested in investing a few million dollars in the development of a mine and then, for example, signing a contract with auto manufacturers, such as BMW, Volkswagen, Mercedes or Renault.” "If there is an agreement between a company mining lithium in Portugal, with an automobile manufacturer, it may be possible to build factories in the country," said the analyst.
But for those who believe that lithium will solve Portugal's financial problems, Martim Facada advises putting a brake on the enthusiasm.
"To say that lithium can develop the economy and industrialise the country is an exaggeration. It is not because a raw material is worth a lot that a country is rich. In the case of lithium, if an industry develops of extract and produce carbonate and lithium hydroxide, this will create employment and develop the areas around the mines, but it will not make Portugal a rich economy," clarifies Facada, in an interview with Dinheiro Vivo.
‘Llithium fever’ started about two years ago, when the price of the mineral more than tripled, from seven to 27 US dollars. This was due to China’s plan to reduce carbon emissions at the same time as the production of electric cars grew 200% in a year. Demand outstripped supply, causing the price to skyrocket.
Last month, the Secretary of State for Energy, Jorge Seguro Sanches, said that this year's exploration licenses will be auctioned off, hoping for a higher fee income for the State.
Extraction licences for lithium, as for oil and gas, will not trigger a stream of limitless cash flowing into Portugal's treasury. For oil and gas, the extraction risk outweighs the potential monetary gain, argue the environmentalists, as the State does not own the companies involved, unlike in Norway where the profits as well as any licence fees end up in the treasury as the State owns 67% of Statoil.
Comments
Portugal would be wise to sit with the knowledge that they have a commodity that is, and will be required in the future for the purpose of transport.
Portugal's Minister of transport will need to be tough during the negotiations to get the best deal that is possible This could include a manufacturing plant in Portugal to produce the Lithium batteries.
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Made a mistake with Minister of Transport, it should read: Minister of Finance/Commerce
Portugal's Minister of transport will need to be tough during the negotiations to get the best deal that is possible This could include a manufacturing plant in Portugal to produce the Lithium batteries.
To even begin to make progress, really huge amounts of battery production is required.
It's not solar panels or windmills that are holding us back, it's the need for affordable large capacity batteries.
None the less, I have no doubt that environmentalists will protest vehemently about lithium mining.
Because mining is bad.