After Northvolt exit: Galp scraps plans for lithium plant in Portugal

Portuguese energy company Galp has decided not to realise the lithium conversion plant in Portugal that was planned together with Northvolt. The search for new partners has been unsuccessful following Northvolt's withdrawal from the project.

Back in 2021, Northvolt and Galp founded a 50:50 joint venture called Aurora, which would be responsible for the construction of a lithium conversion plant in Setúbal (Portugal). The goal was an annual production capacity of up to 35,000 tonnes of battery-grade lithium hydroxide and to start commercial operation in 2026.

However, due to the worsening financial situation at Northvolt, the Swedish battery cell manufacturer Galp announced its decision to no longer invest in Aurora at the beginning of 2024. Since then – as Galp describes it – attempts have been made to find new international partners, but without success. “Despite significant efforts, which included assembling a qualified team, conducting engineering studies, preparing licensing processes, and seeking incentives and funding, the current context and the inability to count on an international partner make it impossible to continue with the project,” Galp writes in the press release.

Northvolt’s exit can be explained by the fact that the Swedes have a lot on their plate. The company recently filed for bankruptcy protection under US law – better known as Chapter 11 bankruptcy – and at the same time, CEO Peter Carlsson resigned. Northvolt has been battling a massive downward trend for months: it first became known that BMW had cancelled an order worth billions due to delivery delays (caused by production problems). The combination of cancelled orders and the capital-intensive problems in scaling up production put the company in a difficult financial situation.

As a result, the company initiated a ‘strategic review,’ announced cost-cutting measures and reorganised the Management Board. In the meantime, however, doubts are growing within the industry about Northvolt’s comeback: Traton brand Scania, which wanted to source all its battery cells for electric trucks from Northvolt, is reportedly looking for alternative suppliers.

And Northvolt’s two largest shareholders, namely Volkswagen and Goldman Sachs, are writing off their Nothvolt shares.

galp.com