Savannah’s Partners Eye Portugal for New Lithium Refinery

Savannah's partners in the Boticas lithium project, located in the Vila Real district, have set their sights on Portugal as a potential site for a new lithium refinery. AMG, the German company, recently opened a refinery in Germany, but its CEO has hinted at the possibility of establishing another refinery in Portugal.

"Portugal has the most project announcements for lithium refineries, potentially four," said Emanuel Proença, CEO of the British mining company, during a call with analysts on Friday. "Aurora, Lifthium, and a potential AMG refinery have all been announced. For a small country on the edge of Europe, this is significant."

Proença praised AMG's accomplishment in being the first to open a large-scale lithium refinery in Europe. The German facility has a capacity to refine enough lithium to supply 500,000 batteries annually, equivalent to 20,000 tonnes per year. By 2030, AMG plans to increase this capacity to 100,000 tonnes of lithium hydroxide annually, representing 14% of the projected market share. Annual demand for lithium for batteries in Europe is expected to reach 700,000 tonnes by 2030.

Proença emphasized the importance of the mine's location for the project's success, highlighting the need for lithium in Iberia. "One in five cars produced in the European Union is manufactured in Portugal and Spain," he noted. He pointed to nearby electric car initiatives, such as Stellantis in Mangualde and Autoeuropa's electric car project, as well as the Chinese CALB project for a battery factory in Sines. "This is a great opportunity for Portugal and the Iberian Peninsula," he said.

Regarding production agreements, Proença mentioned that between 50% and 75% of production remains unallocated, adding that they have already received interest from the ceramics sector, which also uses lithium in production.

He noted that despite a recent meeting with IAPMEI, there has been no progress with the Battery Value Chain (Agenda CVB), which involves 19 companies. "We hoped the process would be further along by now, allowing for more funding for our projects," Proença said, citing the recent change of president as a factor.

Proença also expressed interest in exploring new areas if they become available but said the main focus remains on the current project, which he believes has the "best resources." He added that starting production at this project would demonstrate its progress and facilitate opportunities for bidding on other areas.

CaixaBI recently began covering Savannah with a recommendation of "buy" and set a target price of 7.8 pence per share (GBx). The company reported its highest-ever cash inflow of £20 million. Key investors include AMG (16%), businessman Mário Ferreira (9%), and Lusiaves (4%).

Proença addressed the current state of lithium prices, stating that they are "depressed" and that the downturn has lasted longer than expected. Despite this, he pointed to strong demand for electric vehicles, noting that the global market for EVs grew by 22% in the first half of 2024. He emphasized the growing need for quality electric vehicles, predicting that global demand for lithium will rise 2.6 times in the coming years. "Europe is going to need a lot of lithium," he added.

Proença also acknowledged that expropriations may occur as production begins in 2027, but stressed that they would be kept to a minimum and involve mainly land without defined owners or undivided estates. "From that date onwards, the game will be up," he said, highlighting the company's future opportunities to generate value.

Addressing local protests against the project, Proença acknowledged that "no project has 100% support," but he believes that "the majority of the local population understands the project today."

He expressed optimism for Portugal's electric vehicle value chain, noting the number of projects underway, including battery factories and refineries. "We have seen interest from many companies in investing heavily in the country. I'm very positive that Portugal will succeed in building an electric car value chain," he said.