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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Savannah Resources Plc    SAV   GB00B647W791

SAVANNAH RESOURCES PLC

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Portuguese communities lock horns with lithium miners to save their land

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02/14/2020 | 01:12am EST
Demonstrators protest against lithium mines in downtown Lisbon

The lush, green hills where Paulo Pires has for years brought sheep to graze above his picturesque Portuguese village may soon be transformed by the race to power electric vehicles.

Signs of change already give him sleepless nights. Hundreds of drill holes across the countryside show where miners want to excavate the land for lithium, a vital ingredient for batteries used in electric cars, smartphones and energy storage.

"If my livelihood is taken away from me, I won't have a future elsewhere," said 45-year-old Pires, whose village lies in the municipal district of Boticas.

Pires and his idyllic surrounds are on one of the frontlines of a battle pitting companies eager to exploit Portugal's 60,000 tonnes of known lithium reserves against locals determined to preserve their rights over the land and stop the exploitation.

It puts the minority government in a tight spot at home. Growing opposition to lithium exploration by local groups, which communally own and manage rural areas, could mean miners reach an impasse and seek government support to expropriate land.

Lisbon's actions will also have repercussions beyond its borders. Its reserves may be modest compared to Australia and Chile, the world's top lithium producers, but Portugal is central to Europe's bid to cut reliance on lithium imports.

Tapping European deposits of the "white gold" is an important part of the European Union's ambition to secure more of the battery value chain as the continent's carmakers roll out electric vehicles, a European Commission spokesperson said.

Portugal, which produced about 1,200 tonnes of lithium last year, currently sells almost exclusively to the ceramics industry rather than producing high-grade lithium needed for car batteries. It is already Europe's largest lithium producer, but Portugal remains a small player compared to Australia and Chile, with output of 42,000 tonnes and 18,000 tonnes respectively.

Europe, with just 3% of global battery production capacity, has no lithium refineries and relies on imported raw materials.

As the world seeks to phase out fossil fuels, dozens of miners, such as Australia's Fortescue, have applied for almost 100 licenses to explore for lithium in Portugal.

GRAPHIC: Lithium mining in Portugal - https://graphics.reuters.com/PORTUGAL-ENVIRONMENT-LITHIUM/0100B5E93L3/PORTUGAL-ENVIRONMENT-LITHIUM.jpg

GRASSROOTS ACTION

Some miners are already building up operations. Britain's Savannah Resources has a license for Pires's Boticas area and Portugal's Lusorecursos has a license for nearby Montalegre. The two areas make up the Barroso region, a world agricultural heritage site.

Both companies are now awaiting approval from the state environmental agency to proceed with their plans that could involve refining lithium to raise the grade of the product.

An international tender will determine who secures rights to the rest of Portugal's lithium-bearing territory, covering nine areas with investment in just five of these estimated to be worth 3.3 billion euros ($3.6 billion), the government said.

But anti-lithium sentiment is gaining ground. At least five municipalities have passed motions against exploration and grassroots groups have signed a national manifesto opposing the government's mining strategy.

"These companies come with millions (of euros). What can we do with our little money? We can only try to stop them," Pires said.

In a bid to defuse concerns, the government is preparing a new mining law to tighten rules on future licenses and is discussing the draft with local authorities during February.

Companies and the government say mining could bring money and jobs to inland regions struggling with ageing populations and low investment.

"When we extract lithium in Portugal there's one thing we are certain of: the highest environmental standards will be observed, the most responsible social practices will be observed and this is also a matter of security of supply," Economy Minister Pedro Siza Vieira told Reuters.

'GREEN ECONOMY'

"Lithium is critical for the future of the green economy," he said. "It's better to extract it here than take it from other countries where we are not certain the same standards will be observed."

Much of the land expected to contain lithium in Portugal, including the areas where Lusorecursos and Savannah have exploration rights, is classified as common land, known as "baldios" in Portuguese.

Local associations have the right to decide how it is used, such as for hunting or farming. Many associations have passed motions against exploration to avoid damaging the countryside and disrupting age-old ways of life.

"One of our mountains will simply disappear. It will be cut in half. The impact will be brutal," said Fernando Queiroga, the mayor of Boticas, one of the municipalities that have backed motions against lithium mining.

Such motions have no legal weight. But if developers cannot secure agreement in talks with local associations and private landowners, the companies will need the government to grant them rights to expropriate land in the public interest.

"When and if the question arises, the government will make the decision under the terms of the applicable law," an Environment Ministry spokesperson said on the issue.

But backing expropriations would complicate life for the Socialists, who are governing without a majority. The companies say it could lead to lengthy legal challenges.

Savannah told Reuters it was in talks with local stakeholders and had forged several commercial access agreements. Lusorecursos said it saw no reason to approach associations before starting negotiations over land rights.

Activists are already winning some battles. Fortescue withdrew a bid for a license last year in the Alto Minho region after local opposition. The government removed two prospective license areas over environmental concerns expressed by local authorities and environmentalists .

Meanwhile, 18 activist groups have demanded more public transparency in drawing up the new mining law. "I really am willing to go to the end of the world for this," said local activist Maria de Carmo Mendes.

By Victoria Waldersee and Catarina Demony

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