European Central: The Race For Lithium In Portugal
Bloomberg Creative Photos
While Serbia axed a proposed lithium mine after protests concerning environmental damage, Portugal’s environment agency approved mining in six areas of Portugal. European countries are typically not the source of raw materials such as minerals but Portugal is one of the top 10 lithium producing countries in the world. It is estimated that Portugal has 60,000 metric tons of Lithium in deposits throughout the country. Portugal has been planning on increasing mining for several years and now the plans are being finalized.
Unfortunately it is clear there is a disconnect between what residents and the federal government think regarding lithium mines. In the town of Covas do Barroso, a proposed mine would bring in 800 jobs for the town, along with 1.3 billion euros in revenue during the first 15 years of operation. However, the municipality of Boticas which includes Covas do Barroso shows that 95 percent of locals are against lithium mining within the town. It is interesting such a high percentage are against the mine as 800 jobs would be significant for the municipality which had a population of 5,750 inhabitants in 2011. Locals feel the natural beauty of rural Portugal is their source of wealth. It appears that they are hesitant to let the environment be destroyed now after but already ruined by industrialization. Locals are also concerned about the potential damage to the agri-food economy of the region.
The desire to mine for lithium can be explained by the surge in price lithium has seen. Lithium demand is currently being driven by the rise in electric vehicles. Cars than run on gas use lead-acid batteries meanwhile electric vehicles use lithium batteries. The increase in value stands to help Portugal’s economy, which has a lower GDP per Capita and median hourly wage than those of the European Union. The median hourly wage in 2018 was only 5.37 euros in Portugal, paling in comparison of 10.05 euros in Spain and 13.18 in the EU (excluding Great Britain). Several Eastern European member states have noticeably surpassed Portugal for median hourly wages the Czech Republic, Estonia, and Slovakia. Portugal also While a price increase is a good thing for lithium producing countries, it also delays an energy transition from carbon. Higher prices for lithium will limit the number of people who can afford to buy electric vehicles meaning gas powered cars may be around longer than originally predicted, particularly as gas powered vehicles remain more affordable. Portugal should also be cautious about how much this price increase is due to the pandemic and problems with the supply chain. If prices dramatically drop then the economic benefit of mining for lithium in Portugal may not be as strong as previously thought. This may be particularly true as the mining will be done by Savannah Resources, a foreign company based in London which will take a large portion of the profits out of Portugal yet leave Portugal with the environmental damage.
A factor Portugal needs to take into consideration is while its Lithium deposits are significant, it has to prepare for what comes next afterwards. Mining can damage the environment for centuries as is the concern in the United States, and the Portuguese government will hopefully have provisions with companies to ensure that companies are responsible for not only mining as environmentally friendly as they can along with cleaning up after mines are eventually closed. This has actually led to criticism of electric vehicles due to the potential environmental damage from mining the raw materials to make vehicles that are supposed to be environmentally friendly. Portugal will also need to plan for what would come next for towns after the mines close in the way of employment. While mines can increase jobs significantly for towns such as Covas do Barroso there is the risk of the town’s population growing and then dropping rapidly if no new job opportunities replace the mines.
European countries have been struggling to increase economic growth but selling out the future is not the answer. There is an infinite amount of Lithium in Portugal, and the country should not ruin the environment for a relatively short period of economic benefit. If Lithium mining continues at the current rate of 1,000 MT a year, Portugal’s deposits would be depleted in 60 years if the pace of mining remains constant.
