Portugal Loses Leading Lithium Refining Project

Written by Martin Lynch, European News Editor for IIR News Intelligence (Sugar Land, Texas)

Summary

Plans for a 492 million-euro (US$566 million) lithium refinery in Estarreja, Portugal, have been cancelled due to a lack of customer interest according to leading backer José de Mello Group.

Blow to Plans

Portugal's plans to create an integrated lithium mining and processing industry have been dealt a severe blow as the José de Mello Group has scrapped plans for a 492 million-euro (US$566 million) lithium refinery in Estarreja. 

The project was being led by Lifthium Energy, a green lithium developer owned by the Mello Group and its chemical subsidiary Bondalti. It is one of a number of key Portuguese lithium mining and processing projects that were meant to help realise the European Union's goal of reducing its exposure and reliance on lithium imports from China and others. According to Industrial Info Resources data, there are  two key Estarreja projects worth more than US$470 million in investment. If realized it could have produced enough lithium hydroxide every year to make half a million electric vehicle (EV) batteries. 

Reasons for Cancelling

"Despite all the effort that was made to secure long-term contracts to allow investment in a factory, this was not possible, therefore we will not proceed at this stage with an industrial investment in lithium," the chief executive officer of José de Mello, Salvador de Mello, told Expresso. "Unfortunately, market conditions in the European automotive industry and the battery and lithium supply chain are not meeting our expectations. "We wanted to participate in a very important movement to reindustrialize Europe. The market is what it is, and at the moment it is not responding positively to these investments." 

EU Support Not Enough

Earlier this year, the Estarreja project was designated a Strategic Project by the European Commission (EC) under the Critical Raw Materials Act, which was enacted to identify, fast-track and and financially support ventures deemed essential to Europe's industrial resilience and security of supply. The project had already qualified for 180 million euro (US$207 million) in public support. In late 2024, Portugal lost another key refining project when Portuguese energy company Galp dropped its plan to construct the Aurora lithium conversion plant in Setúbal after 50:50 project partner, Swedish battery maker Northvolt, pulled out earlier in that year. 

Europe's Critical Minerals Problem

Most of the critical minerals Europe needs are mined and processed outside the EU, and supply is often concentrated in either one or a handful of non-EU countries. For example, China provides 97% of the EU's magnesium (used in hydrogen-generating electrolysers), 71% of gallium and more than 40% of its germanium, baryte and natural graphite. Turkey supplies 99% of the EU's boron (used in solar panels) and 61% of antimony, while Guinea supplies 61% of its aluminum, and Chile supplies 79% of its lithium. A recent audit by the European Court of Auditors, found that more than 25% of EU supply (2016-2020) for 18 out of 26 critical raw materials that are important for the energy transition are concentrated in one country. That audit also found that the EU's ambitious 2030 targets for critical minerals are "out of reach." For additional information, see February 16, 2026, article - EU's Critical Minerals Goal 'Out of Reach'. The goal of the Critical Raw Materials Act from 2024 set out a 2030 target that Europe must extract at least 10% of strategic raw materials, process at least 40% of them and recycle at least 25%. In April 2025 the European Commission (EC) announced 47 strategic projects that would be fast-tracked through the permitting process and have access to financial support. For additional information, see April 07, 2025, article - Europe Fast-Tracking 47 Critical Minerals Projects.

Key Takeaways

• Plans for a 492 million-euro (US$566 million) lithium refinery in Estarreja, Portugal, have been cancelled, setting back the country's goal of creating an integrated lithium mining and processing industry. 
• The developer said "market conditions in the European automotive industry and the battery and lithium supply chain are not meeting our expectations."
• Industrial Info Resources data show two key Estarreja projects worth more than US$470 million in investment.

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).