Europe’s electric car industry received a significant fillip in its efforts to secure raw material supplies after Portuguese authorities gave a green-light to what will be one of the continent’s first large-scale lithium mines. London-listed Savannah Resources said on Wednesday that the Portuguese regulator has issued a positive declaration of environmental impact for its Barroso lithium mine, which has a target of producing enough lithium for 500,000 electric cars a year.  

Demand for lithium in Europe is predicted to surge fourfold to account for a quarter of global demand by 2030, but the region at present produces less than 1 per cent of the world’s supply, according to Benchmark Mineral Intelligence. Obtaining permits has been a key issue holding Europe back from developing a battery raw material supply chain.  

The Savannah project was viewed as a test of whether the region might be about to overcome its recent history of opposition to mining. “This is an extremely important step forward, not only in the development of the project but also in the development of the lithium raw material industry in Portugal,” said Dale Ferguson, chief executive of Savannah. United in Defense of Covas do Barroso, a local community group that opposes the project, said it “condemns” the decision and was “baffled” by its acceptance given the potentially “devastating” ecological, environmental and socio-economic impacts.  

Savannah’s shares rose 22 per cent on Wednesday following the decision. The company first submitted its environmental impact assessment three years ago. The regulator’s decision allows it to proceed with economic studies and take the final licensing steps over the next year. It is aiming for first production before mid-2026. Under the terms of the decision, it must meet certain conditions such as limiting the removal of vegetation to certain months of the year.  

The Barroso mine is aiming to produce 200,000 tonnes of spodumene concentrate from lithium-containing rock, which will be upgraded to battery-grade lithium at a refinery that Savannah hopes will be located in Portugal. The EU Critical Raw Materials Act, which was unveiled in March, set out the European Commission’s aim to simplify permitting processes for mining companies and reduce the region’s reliance on China and other nations for key EV and green power minerals such as lithium, cobalt and graphite. China controls 56 per cent of lithium processing, with much of the rest taking place in Chile.  

Europe is seeking to change that through local projects including two refinery developments led by a consortium of Swedish battery company Northvolt and Portuguese energy company Galp and another that includes Portugal’s largest chemicals company Bondalti. Last year, the Serbian government revoked Rio Tinto’s licences to mine lithium at the $2.4bn Jadar mine in Serbia — the largest planned lithium mine in Europe — after months of widespread protests. Separately on Wednesday, lithium start-up Vulcan announced it would supply one of Stellantis’s French carmaking plants with geothermal energy in the hope of extracting lithium in the process. Vulcan’s technology involves pumping lithium to the surface via geothermal wells.