Portugal’s ambition to build an integrated lithium industry has suffered another major setback after the José de Mello Group abandoned plans for a €492 million refinery in Estarreja, citing a lack of customers willing to support the investment.
The withdrawal of the Lifthium project comes only months after it was designated a Strategic Project by the European Commission under the Critical Raw Materials Act — a status intended to identify ventures considered essential to Europe’s industrial resilience and security of supply.
Lifthium’s chief executive told Expresso that market conditions no longer justified proceeding with the refinery. The company had been unable to secure the long-term customer contracts needed to finance it.
The project had qualified for €180 million in public support, although the funding was never used.
Its demise removes another key component of the industrial chain repeatedly presented by governments and mining companies as the justification for extracting lithium in Portugal.
For years, communities facing open-pit mining projects have been told that domestic extraction would form the foundation of a higher-value Portuguese and European industry extending from mining and processing to battery production and advanced technology.
That promise now looks increasingly fragile.
GALP abandoned its proposed Aurora lithium conversion plant in Setúbal in November 2024 after former partner Northvolt withdrew and no replacement investor could be found. Aurora had itself been promoted as a “stepping stone” towards an integrated European battery value chain. Galp’s announcement confirmed that the project had become impossible without an international partner.
With Aurora and Lifthium both shelved, Portugal could be left extracting lithium for export while much of the processing, technological development, skilled employment and economic value is generated elsewhere.
MiningWatch Portugal described the latest withdrawal as a significant blow to the country’s lithium strategy and said it should force policymakers to reconsider arguments made to communities expected to accept new mines.
“The withdrawal of one of Portugal’s flagship lithium projects demonstrates that Europe’s critical raw materials challenge cannot be solved through political declarations alone,” said MiningWatch founder Nik Völker.
“Strategic designation cannot substitute commercial viability. If downstream projects disappear, policymakers must honestly reassess the economic justification repeatedly presented to local communities asked to host new mining operations.”
The decision also raises questions about how the European Commission evaluates projects seeking strategic status.
Under the Critical Raw Materials Act, selected mining, processing and recycling ventures can benefit from accelerated licensing procedures, coordinated public support and greater political priority.
Lifthium received that endorsement despite being unable, according to its promoter, to secure sufficient long-term demand to make the refinery financially viable.
MiningWatch argues that the case exposes a potential weakness in the assessment process: projects may meet political and technical objectives on paper without possessing the commercial foundations needed to survive volatile mineral prices, changing battery technologies and uncertain demand.
Europe’s need for secure supplies of lithium and other critical materials is not in dispute. They are considered essential to the energy transition, industrial competitiveness, defence and reducing dependence on outside suppliers.
The collapse of two major Portuguese processing projects shows, however, that designating projects as “strategic” cannot guarantee either customers or investment.
It also leaves a more uncomfortable question hanging over communities being asked to sacrifice land, water and traditional livelihoods: if Portugal’s promised lithium value chain is disappearing, precisely whose industry will its mines ultimately serve?
BOX STORY
Brussels wrongly withheld environmental evidence on strategic mines, Ombudsman finds
The European Commission committed maladministration by withholding environmental assessments used to grant privileged status to mining projects, the European Ombudsman has concluded.
The finding follows a complaint by environmental law organisation ClientEarth after Brussels refused public access to documents submitted by mining companies applying for recognition under the EU’s Critical Raw Materials Act.
Among the developments concerned is Savannah Resources’ proposed open-pit lithium mine in Barroso, where local communities have fought the project since 2018. The mine’s designation as a Strategic Project is also being challenged before the European Union courts.
The Commission argued that the environmental information was commercially sensitive. The Ombudsman found its reasoning unconvincing and concluded that Brussels had failed to justify keeping the assessments secret.
Given the potentially extensive ecological consequences, the Commission “should be able to explain to the public why it considered that the environmental impacts of a project would be sufficiently monitored and addressed”, said the Ombudsman, recommending that the documents be released.
An Ombudsman recommendation is not equivalent to a binding court order, but a finding of maladministration places the Commission under considerable pressure to comply and explain any refusal. The European Ombudsman’s finding was issued on July 15.
Strategic status carries substantial advantages. Projects may receive faster licensing, easier access to public finance and priority treatment in national courts.
Communities living beside the proposed mines had no role in the European selection process and were denied access to the environmental evidence on which the Commission based its decisions.
“For almost two years, local communities were completely shut out of the process that would transform their land and livelihoods,” ClientEarth lawyer Ilze Tralmaka said.
“They had no say, and even long after the decisions had been made they could not discover why these projects had been declared safe for nature and people.”
Carla Gomes, of the Barroso community campaign UDCB, said the Ombudsman’s conclusion confirmed complaints residents had been making for eight years.
“There has been a clear lack of transparency and democratic participation in the entire process surrounding this mine,” she said.
“It is completely unacceptable for us to be treated as a sacrifice community, particularly through a process shrouded in secrecy.”
Gomes called on the Commission to make the information public and accessible, adding that residents will continue fighting to protect Barroso as “a truly green region” and an example of sustainable living.
The finding takes on added weight following the abandonment of two major Portuguese lithium-processing projects.
Communities were asked to accept the environmental and social costs of mining on the promise of a strategic domestic industry. They now know that Brussels withheld the evidence used to assess those environmental costs — while the industrial chain invoked to justify them is steadily falling apart.
Sources: MiningWatch Portugal/ Union in Defence of Covas do Barroso/ https://www.ombudsman.europa.eu/ ECO online
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