Galp-Northvolt Joint Venture Lithium Refinery Faces Two-Year Delay Due to Uncertain Funding
The Aurora joint venture project, formed in 2021 by Portuguese oil company Galp and Swedish battery manufacturer Northvolt, to build a lithium refinery in Setúbal, Portugal, may face a two-year delay, pushing its completion date to 2028. The original target was to begin production in 2026, with the refinery capable of producing 52,000 tons of lithium hydroxide annually—enough to supply batteries for approximately 650,000 electric vehicles (equivalent to 50 GWh).
The European Investment Bank (EIB), which is considering an €825 million investment, revealed the delay in a recent report, as quoted by the news platform *Sifted*. The project is expected to become Europe’s largest lithium refinery.
Galp reaffirmed its commitment to the project but acknowledged that the uncertainty around securing national and European funding has contributed to the delay. Access to funds through the European Union’s Recovery and Resilience Plan (RRP) has been ruled out, as the RRP only supports projects set to begin production by the end of 2026. Galp and Northvolt had to withdraw their request for aid from these funds as a result.
Additionally, the timeline has been complicated by uncertainties regarding when lithium supplies from Portuguese mines will be available, a critical factor in determining the refinery's operations.
Northvolt, which is involved in multiple battery manufacturing projects across Europe, did not comment on the delays. However, its latest annual report did not provide a specific timeline for the Aurora project. Last year, Northvolt estimated the project’s cost at €700 million. While initially planned as a joint investment between Galp and Northvolt, the companies are now seeking external funding, primarily from the European Union and the EIB.
Beyond project-specific challenges, Galp has raised concerns about the high tax burden in Portugal, which could affect the profitability and feasibility of major investments like the Aurora project. Maria João Carioca, Galp’s CFO, emphasized that taxation, along with regulatory and fiscal contexts, can either accelerate or hinder investment decisions.
While the final investment decision for the Aurora project is still scheduled for 2024, both Galp and Northvolt are awaiting a decision on national and European incentives, which are deemed essential for the project’s international competitiveness.
The Aurora project is part of a broader trend in Europe to bolster domestic battery production and reduce dependency on critical mineral imports, especially from China. However, Northvolt has faced difficulties this year, including BMW canceling a $2 billion battery order due to production delays and the company undertaking a strategic review of its operations.
