Lisbon, Nov. 29, 2024 (Lusa) - The withdrawal of Portugal's Galp Energia from a project for a lithium refinery in Setúbal could "have significant implications for the battery sector in Portugal and Europe," according to an analysis published by XTB.
According to the organisation, in a note released on Thursay, Galp's withdrawal from the "lithium refinery project in Setúbal, developed in partnership with Northvolt, could have significant implications for the battery sector in Portugal and Europe" since the project was "a strategic move for the European Union" as it had aimed to "reduce dependence on raw materials outside Europe."
According to XTB, "the investment would be high and several jobs would be created, as well as positioning Portugal as a relevant country in the energy transition."
Galp decided to abandon the Aurora project after Northvolt withdrew and it failed to find another partner, the company said in a statement to the Securities Markets Commission (CMVM) on Tuesday.
"Galp has decided not to go ahead with the construction of the Aurora project," it said.
Northvolt announced on 22 November that it had filed for bankruptcy protection in the US, while saying that its plant in Sweden would continue to operate.
In its analysis, XTB emphasised that "the current situation at Northvolt increases uncertainty" and that, as well as ending the Aurora project, it "also undermines investor confidence in the European battery sector, increasing dependence on other suppliers, especially the Chinese, since they lead the market for batteries and electric vehicles."
The Aurora project, it said, could have created "a positive impact both economically and socially", he pointed out, and as well as boosting the local economy, "it would position Setúbal as a strategic centre for the production of lithium for batteries, which is essential for the energy transition."
According to XTB, the new situation jeopardises "European competitiveness against China in the electric car market", weakening "the possibility of achieving autonomy in this crucial sector for the energy transition and the green economy."
XTB said that "the increase in demand for lithium has placed Europe before a paradox", between "the urgent need to exploit this resource within its borders to reduce external dependencies" and "the environmental, economic and social impacts associated with its extraction.
"Northvolt's difficulties expose problems in the European battery industry and affect competitiveness in the electric car market," it stated, noting that Europe "still depends on Asian suppliers, while local companies face high costs and technical challenges," making production and the final price of electric vehicles more expensive.
The analysts also point out that "Chinese companies are entering the European market with more affordable electric cars, which has put pressure on local manufacturers," emphasising that in order to tackle this situation it is necessary to "invest more in infrastructure for battery production and encourage the production and consumption" of electric vehicles.
XTB also points out that "Europe has also been applying protectionist measures aimed at preventing new players from entering the sector, and these tariffs vary depending on the brand and can be as high as 35%."
ALN/ARO // ARO.
Lusa
