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Agência para o Investimento e Comércio Externo de Portugal

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Northvolt and Portuguese oil company Galp to build lithium conversion plant as initial European battery production set to begin.

Swedish battery manufacturing venture Northvolt has reached a deal with Portuguese oil firm Galp to build what is intended to be Europe’s largest integrated lithium conversion plant.

 

The deal comes as Northvolt prepares to begin manufacturing its first batteries for electric vehicles and other uses, which it hopes to do before the end of the month.

 

Northvolt was set up as part of an EU effort to reduce the region’s dependence on Asian producers for batteries aimed at electric vehicles and power storage.

 

The company said the conversion facility in Portugal would have an initial output capacity of up to 35,000 tonnes of battery-grade lithium hydroxide, a material required for the proudction of lithium-ion batteries – enough for batteries powering about 700,000 electric vehicles.

 

Battery plan

 

Northvolt chief operating officer Paolo Cerruti said the development of a European battery manufacturing industry would provide  “tremendous economic and societal opportunity” for the region.

 

“Extending the new European value chain upstream to include raw materials is of critical importance,” he said.

 

The plant is hoped to create a domestic supply of key materials as well as setting a standard for sustainability in sourcing, Cerruti said.

 

As part of the deal Northvolt is to take about one-half of the plant’s capacity for use in its own battery manufacturing.

 

The facility is to use spodumene from key suppliers, probably on the Iberian peninsula, as a raw material for conversion into lithium hydroxide. Spodumene is a mineral source of lithium.

 

The factory is envisioned to begin operations in 2026, pending a final investment decision.

 

It could represent an investment of about 700 million euros (£594m) and create up to 1,500 direct and indirect jobs.

 

Production launch

 

Galp chief executive Andy Brown said it was a “once-in-a-generation opportunity” to position Europe as a leader in a vital industry.

 

Most of the world’s lithium currently comes from mining operations in Australia, Chile and China.

 

Volkswagen earlier this month announced a deal to source lithium from developer Vulcan from 2026, which is extracting it from waters in Germany’s Upper Rhine Valley in a process linked to geothermal power generation.

 

Northvolt chief executive Peter Carlsson – a former Tesla executive – told Reuters staff at the company’s factory in Skelleftea, a former gold mining town about 200 km south of the Arctic Circle, is working “intensely” to produce the firm’s first batteries.

 

“Even if it means the first battery is made on New Year’s Eve, it’s going out this year,” he said.

 

The EU in 2019 approved a 3.2bn euro subsidy from seven member states, led by Germany and France, into the battery industry plan.

 

The project, of which Northvolt is a key part, launched in 2017 and is aimed to be complete in 2031.

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