Together with Portuguese oil firm Galp, Swedish battery manufacturer Northvolt wants to construct and exploit the biggest factory for lithium conversion in the EU. The two partners have set up the Aurora joint venture to reach that ambition. According to both companies, the lithium conversion process will be the most sustainable in the industry.
When the factory runs at full potential, it will produce enough lithium to supply batteries for 700 000 vehicles, corresponding to 50 GWh of battery production. In addition, the annual output is projected to 35 000 tons of battery-grade lithium hydroxide, a much-needed and critical material for the manufacturing of lithium-ion batteries.
To meet growing demand, the supply of lithium must quadruple by the end of the century, but the mining industry struggles to keep up. As a result, several manufacturers secure their supply line through deals with third parties in fear of falling out.
Aurora, a fifty-fifty joint venture, has decided to erect the plant at the port city of Sétubal. The investment size has yet to be finalized, but it is estimated at some €700 million compared to similar projects. The deadline for commercial operations is 2026.
The factory isn’t mining for lithium, which as a metal can be found in all places of the world. Instead, it will be provided with a spodumene concentrate converted into lithium hydroxide. Aurora claims that its Iberian suppliers will have to meet the highest standards in sustainability to remain in line with their stringent environmental goals.
Northvolt, backed by BMW, Volkswagen, Scania, and Volvo, wants to create the greenest lithium-ion battery. It currently has three factories, with two of them under development, and is looking to establish a European integrated battery value chain to decrease foreign and, in particular, Asian dependency.
Providing raw materials forms an essential shackle in Northvolt’s ecological chain. Setting up Aurora is a steppingstone for the development of that values chain, according to Northvolt.
For the time being, lithium is primarily sourced in Chile, Australia, and China. Northvolt will secure an offtake for up to 50% of the new plant’s capacity in Sétubal as part of the agreement.
For Galp, the deal fits its decarbonization strategy while also wanting to seize the opportunity for new business development. CEO Andy Brown commented: “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 […]. However, 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.”