Galp partnership with Northvolt for lithium refinery off the table

Portuguese energy company Galp has decided not to proceed with the construction of the Aurora project, a lithium refinery in Setúbal in partnership with Northvolt, after the Swedish company informed the Portuguese oil company of its decision to halt investment in the project this year.

“Since then, Galp has sought to identify new international partners, but without success,” the Portuguese oil company said on Tuesday in a statement to the Securities Market Commission (CMVM).

Galp had established that it would make a decision on the investment, which was initially expected to be completed in 2026, later this year.

The Aurora project, a partnership in equal parts between Galp and the Swedish manufacturer of electric batteries, had been working since 2021 to establish a lithium conversion refinery in Setúbal, intending to supply the battery industry through the use of Portuguese lithium reserves, Galp recalls in the statement.

“Despite significant efforts, which included meeting a qualified team, conducting engineering studies, preparing engineering studies and seeking incentives and funding, the current context and the inability to rely on an international partner made it impossible to continue with the project,” Galp says.

Last year, Northvolt estimated that the cost of developing the refinery in Setúbal would be €700 million.

The construction of the plant was to be paid for jointly by Galp and Northvolt, but the two companies later sought financing and support from the European Union, namely through the Recovery and Resilience Plan (PRR).

Northvolt has since faced severe financial difficulties, having filed last week for protection from creditors under Chapter 11 of the U.S. Insolvency Act, following the resignation of Northvolt CEO and co-founder Peter Carlsson on Friday.