Galp Cancels Plans to Construct Aurora Lithium Refinery in Portugal

Galp, a leading Portuguese energy company, has announced the cancellation of its plans to build the Aurora lithium refinery in Portugal, as reported by several news agencies. This decision follows the withdrawal of Northvolt, a Swedish electric vehicle (EV) battery manufacturer, from their 50-50 joint venture (JV), leaving Galp unable to secure a new partner to move forward with the project. Established in 2021, the joint venture aimed to develop a state-of-the-art lithium processing plant at the Sapec Bay Industrial Park in Setubal, leveraging Portugal's significant lithium reserves.

The ambitious project was designed to produce 35,000 tonnes of battery-grade lithium hydroxide annually, sufficient to support the production of batteries with a capacity of 50 gigawatt-hours. Commercial operations were originally projected to begin by early 2026, with the initiative expected to generate over 1,500 jobs in the region. The estimated investment for the refinery exceeded €1 billion ($1.05 billion), reflecting the scale and significance of the venture. The facility was intended to employ cutting-edge conversion technologies powered by renewable energy to enhance both sustainability and efficiency.

Despite its promising outlook, the project faced numerous challenges that ultimately hindered its progress. Delays arose due to the complexity of the development and uncertainties surrounding funding sources. Furthermore, a downturn in lithium prices, driven by an oversupply from China, reduced the project's economic viability. These factors compounded the difficulties Galp encountered in advancing the refinery.

In a statement, Galp expressed its disappointment, noting, "Despite significant efforts, which included assembling a qualified team, conducting engineering studies, preparing licensing processes, and seeking incentives and funding, the current context and the inability to count on an international partner make it impossible to continue with the project."

The situation was further complicated by Northvolt’s financial troubles, which led to the company filing for Chapter 11 bankruptcy protection in the United States. This move followed failed funding negotiations with major investors and creditors, including Volkswagen and Goldman Sachs. Northvolt, once seen as a frontrunner in Europe’s bid to lead the EV battery market, faced severe financial pressures that affected its involvement in the Aurora project.

Galp’s exploration of lithium opportunities began with a 2021 heads of agreement signed with Savannah Resources. This strategic alliance focused on lithium activities around the Mina do Barroso Lithium Project in northern Portugal, marking Galp’s entry into lithium exploration. However, the cancellation of the Aurora refinery underscores the challenges faced by companies in the rapidly evolving and volatile battery materials sector. While the project’s suspension represents a setback, Galp’s earlier initiatives highlight its commitment to advancing Portugal’s role in the global energy transition.