Portugal's Lusorecursos in talks to fund 400 mln euro lithium project

LISBON, Nov 27 (Reuters) - Portuguese mining company Lusorecursos said on Wednesday it was negotiating a 400 million euro funding deal with several international players as it gears up to explore for lithium in the country’s northern region.

Portugal is Europe’s biggest lithium producer, but its miners sell almost exclusively to the ceramics industry and are only now preparing to produce the higher-grade lithium that is used in electric cars and to power electronic appliances.

Lusorecursos was awarded a concession to explore a mine in Montalegre, near the Portugal-Spain border, in March this year but final approval depends on the outcome of an environmental impact study.

The chief executive of Lusorecursos, Ricardo Pinheiro, told Reuters the company was planning to build its own refinery in Montalegre as a way “to secure the entire value chain, from mining to obtaining the final product: lithium hydroxide”.

Targeting 2023 as the year Lusorecursos would start processing the so-called “white oil”, Pinheiro said the total investment was around 400 million euros ($440 million), with the refinery costing 300 million euros to build.

“The funding is being negotiated with companies from the Far East, but we are also in contact with companies from Europe and the Middle East,” Pinheiro said.

Interest in lithium mining has been spurred by expected growth in sales of electric vehicles, which are cheaper to run and more environmentally friendly than other cars.

But Portugal will face fierce global competition, and warnings of a bubble and oversupply have pushed down lithium prices.

The government is finalising plans for an international licensing tender for lithium exploration to start this year, despite objections from environmental groups.

On Monday, an environmental group in Montalegre, called Association Montalegre with Life, filed a lawsuit seeking to cancel the concession contract between the government and Lusorecursos.

Lusorecursos said the lawsuit was “totally unfounded”.

Portugal’s biggest environmental NGO, Quercus, opposes any large-scale lithium exploration, warning that it would jeopardise the country’s carbon-neutrality goals. ($1 = 0.9073 euros) (Reporting by Sergio Goncalves; Writing by Catarina Demony; Editing by Alison Williams)