The once-optimistic projections for lithium mining in Europe, particularly at Portugal’s Covas do Barroso site, are facing new scrutiny amid global market disruptions and plummeting investor confidence.
Recent developments in Ghana may offer some perspective for local opponents of the Covas do Barroso mine. In October 2023, Ghana awarded a 15-year lease to Atlantic Lithium Limited to mine its Ewoyaa site, one of the top ten largest lithium deposits globally with an estimated 35 million metric tonnes of potential output. However, the company—partly owned by U.S.-based Piedmont Lithium and Cleantech Group—has now announced that the project is on hold. The reason? A dramatic drop in the internal rate of return, from 105% to just 14%, leading Atlantic to declare it unviable under current conditions.
The company had already invested $70 million, but the lithium market has slumped significantly since its November 2022 peak. Factors contributing to the downturn include major lithium discoveries in the U.S. and China, and the slower-than-expected adoption of electric vehicles. Compounding the issue is China’s fast-developing research and application of sodium-based battery alternatives, which are already entering commercial production for short-range vehicles.
These global shifts call into question the long-term viability of other lithium projects, such as those pursued by Savannah Resources in Portugal. Savannah, which has secured fiscal concessions from the Portuguese state and projects a 25-million-tonne output from Covas do Barroso, could face similar economic pressures.
While the Barroso project benefits from geographic proximity to EU refineries and markets—potentially cushioning it from the full brunt of market fallout—it is increasingly likely that operations will proceed on a smaller scale and with diminished returns. This could lead to more balanced decisions that account for both economic realities and the environmental and social concerns of local communities.
