European battery supplier Northvolt and energy company Galt have announced they will be working together to create a joint venture (JV) company called Aurora, which plans to develop the largest and most sustainable lithium plant in Europe. 

The new lithium plant will be located in Portugal and plans to start operations by the end of 2025 and commercial operations by 2026. Galp and Northvolt will have an equal 50% stake each in Aurora, and it is set to have an annual production capacity of up to 35,000 tons of battery-grade lithium hydroxide. Included in the agreement, Northvolt secured an “offtake” of up to 50% of the plant’s capacity for its battery manufacturing. 

The main goal of creating a new lithium plant is the fact it is going to be sustainable while also producing the necessary amount of lithium hydroxide. This follows suit with the Portuguese and European industrialization efforts to embrace the green energy transition. 

“This is a once-in-a-generation opportunity to reposition Europe as a leader in an industry that will be vital to bringing down global CO2 emissions, in line with European and Portuguese climate-change priorities,” said Galp CEO Andy Brown. “To be successful in this drive, we must all work together, industry and decision makers, with a sense of urgency, because if we do not claim this role today, others will.”

Lithium hydroxide is a crucial material that is required to make lithium-ion batteries, and the new plant will be able to deliver enough lithium hydroxide sufficient for 50 GWh of battery production per year. This equals out to enough batteries for about 700,000 electric vehicles, which is one of the biggest markets that require lithium. The demand for lithium hydroxide alone is estimated to grow at least tenfold by the end of the decade. 

The joint venture is still running technical and economic studies regarding the new plant, and is currently looking at several possible site locations for the building. Based on similar projects in the past, this new lithium plant could represent an investment estimated at around $700 million and create as many as 1,500 direct and indirect jobs.

Paolo Cerruti, Co-Founder and COO of Northvolt said in a statement “This joint venture represents a major investment into this area, and will position Europe with not only a path to the domestic supply of key materials required in the manufacturing of batteries, but the opportunity to set a new standard for sustainability in raw materials sourcing.” 

The plant and joint venture are focused on making this plant as sustainable and in line with the green energy movement as much as possible. The plant will use a proven conversion process, using recent process improvements and technologies to their advantage to increase sustainability and efficiency. 

As well, the joint venture is trying to power the conversion process using green energy, which minimizes and eventually will avoid the use of natural gas altogether. Both Galp and Northvolt are confident that Iberia hosts resources that can be recovered with a low greenhouse gas emission footprint, while complying with the highest standards for environmental and human rights. 

“The development of a European battery manufacturing industry provides tremendous economic and societal opportunity for the region. Extending the new European value chain upstream to include raw materials is of critical importance,” said Cerruti. 

Galp already has established themselves as a player in the green energy movement, along with being one of the largest solar power generation companies in Iberia, which makes them a good partner for Northvolt. The project is on course to fit within Galp’s decarbonisation path as well on its capital allocation guidelines, as per announcements at the Company’s latest Capital Markets Day.

Northvolt has also made big progress towards the green movement, with a goal to deliver the world’s greenest lithium-ion battery with a minimal CO2 footprint. The company has grown to more than 2,300 people from over 100 different nationalities. The company has also secured multi-million dollar contracts with big names in the car industry such as BMW, Fluence, Scania, Volkswagen, Volvo Cars and Polestar which support its future green plans. 

Despite the two companies’ motivation for sustainability and environmentally friendly practices, some local folks are still skeptical of the operation. 

Nik Völker of MiningWatch Portugal, a campaign group, said “It seems unlikely that the investment by Galp and Northvolt would benefit the Barroso region in Northern Portugal in the longer term, beyond ore sales during the 12 years of open-pit mine life.” 

As the new plant is planned and built, the joint venture will continue to look for and explore other business opportunities along the value chain while maintaining environmentally friendly practices and methods.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.