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28/05/2024
Mining News

Europe Is Embarking on a Mining Renaissance. Winning Over Locals Is Proving a Challenge

Tucked away in the mountains of northern Portugal, about two hours northeast from the country’s second-largest city of Porto, sits this idyllic farming village. It is home to under 200 people, most over the age of 60, with the surrounding region most famous for its Barrosão cattle, a protected species prized for its meat. The nearest town, Boticas, is a 20-minute drive away, and if you stand on the hilltop, the only sounds you hear are the cattle, song birds and insects.

Covas, however, is set to play host to the green-energy transition in its rawest form. Just a third of a mile away from the houses of Covas do Barroso is one of Europe’s richest lithium deposits—the silvery metal used in electric-vehicle batteries—and a planned mining operation to dig out the mineral.

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Locals are worried about the environmental impact as well as the blight on the village presented by the mine. Speaking to locals, the word “mina” often draws a cringe, and a protest is scheduled later this month. “Our biggest opposition to the mine is that they want to destroy us,” said Nelson Gomes, president of Associação Unidos em defesa de Covas do Barroso, the local protest group. “The intensity of what they want to destroy, but also the proximity. It’s basically inside the village.”

Governments and companies around the world are scrambling to find new sources of critical materials—and in doing so they are easing the approval process for projects that once took years or sometimes more than a decade to get off the ground. Additional supplies of metals like copper, nickel and lithium are going to be crucial to meet the growing demand for the energy transition—with the wiring, magnets, motors and battery cells used in green technologies such as electric vehicles, wind turbines and batteries for storage all requiring mined minerals.

“No doubt there is a real demand story,” said Alex Gorman, mining analyst at U.K. investment bank Peel Hunt. “We are talking about a 35-fold increase in lithium demand and we do not have any large-scale lithium mines in Europe. It’s a massive problem.”

But as governments fast-track approvals on such projects and struggle to convey the importance of efforts to secure materials for the green-energy transition, resistance is growing among locals like the Covas residents who stand to feel an impact and environmentalists who urge caution when moving forward with projects in sensitive ecosystems.

Race for resources

The proposed Covas site is one of the nearly 50 mines now expected to open across Europe by 2030. In Germany, Vulcan Energy Resources is looking to open a lithium mine, harnessing a new technology for extracting the battery metal from brine. In Sweden, Copperstone Resources is hoping to reopen a brownfield mine site to extract the red metal, while Adriatic Metals has just started mining for silver and zinc in Bosnia, with more projects planned from Finland to Greece.

“It’s definitely a [mining] renaissance,” said Rebecca Campbell, global mining and metals lead at law firm White & Case. “For many of us who have been working in the sector, it’s the first time we are seeing primary projects in Europe during our careers.”

“We’re starting to now see material that’s on its way through the supply chain from European mine[s],” she added.

The situation in Europe and the U.S. is strikingly similar, according to Jayni Hein, of counsel at law firm Covington & Burling and former senior director for clean energy, infrastructure and the National Environmental Policy Act at the White House Council on Environmental Quality.

“There’s an uptick in interest in domestic manufacturing and production in the U.S.,” driven by the passage of the climate law known as the Inflation Reduction Act in 2022, said Hein. She said the IRA and other acts have increased funds available for federal agencies to accelerate and improve permitting but noted that working with individual states and their legislatures remains a challenge. “We’re trying to foster a permitting landscape that is both efficient and responsible.”

In Europe, the mining renaissance comes after years of nearly no new mining activity on the continent. Usually, opening a new mine takes 10 to 15 years, often because permitting can take years, according to Peel Hunt’s Gorman. She said a lack of staff with field knowledge has been an issue as well as negative attitudes toward mining in general.

The Covas deposit

In 2017 Savannah Resources, a London-listed mining company, identified the Covas deposit as a possible area to mine, hoping to cash in on green demand. Geological studies of the area stretching back to the 1980s had found possible lithium reserves. The project, however, seemed to have stalled after failing to get the backing of Portugal’s environmental agency.

That changed this year. In May, Savannah Resources received permitting approval from the environmental agency allowing the company to move forward with pre-feasibility studies that include mining one small site to show how it would proceed with a full-scale operation. The approval happened to coincide with the European Union’s proposing critical-minerals legislation to speed up mine approvals across the bloc with various measures, including limiting environmental approval review times to two years.

For Savannah Resources, mining in the Portuguese hills for spodumene, the base rock recovered for lithium extraction, has become more attractive since the government updated its mining laws in 2021 to be more open to exploitation. The company aims to dig four mine sites in the valley, with the largest 1,600 feet across, about the length of five football fields. Currently, Savannah Resources is mining the smallest of those sites, with some of the proceeds used in the local ceramics industry because the company hasn’t yet won approval to process lithium.

“Some of the rock that’s being mined for spodumene—that is currently being mined for ceramics. Well, what we are doing instead of using it all for ceramics, is we’re taking the spodumene out and turning that into lithium hydroxide,” said Dale Ferguson, chief executive of Savannah Resources. Lithium hydroxide is used to make cathode materials for lithium-ion batteries.

Locals worry the Covas river will be used by the mine. Savannah Resources, which has set up two offices in the municipality, has said it would strictly avoid that and instead build reservoirs to store rain water. But Gomes, the local opposition leader, is doubtful. Savannah Resources “will not take water from the river but they need to take it from somewhere. The river Covas springs 20 kilometers away, so they will take it before the river starts, even if not actually using the river.”

Shifting sentiment?

Local backlash against new mines isn’t uncommon. The industry has a long history of environmental destruction, poor relations with local communities and deadly disasters. In 2021, local opposition derailed Rio Tinto’s lithium project in Serbia, though the company is still confident the mine will open in some capacity at some point.

However, governments want and need a secure supply chain of metals and minerals. Most critical minerals are processed in a relatively small number of countries with the threat made more apparent last month after China said it would introduce export restrictions to germanium and gallium—two critical minerals used to make semiconductors. Prices skyrocketed as consumers were suddenly unsure if they would have the raw materials needed to make chips for cars, phones and other tech.

“There are minerals that are needed with the new green transition, resources that you did not need or have any use for before, which are now important for society, for nations, to have. It’s so much needed,” said Jessica Polfjärd, member of the European Parliament and Sweden’s Moderate Party.

Polfjärd said that in Europe, attitudes in governments are starting to shift toward mining, adding that it is up to those lawmakers to help explain the benefits and need for exploiting mineral resources at home.

“There is always more public response when you start something new,” she said. “There is no difference if you want to have a mine or a shopping mall. To put something new in place—it’s harder than existing ones.”

Despite the strong local opposition, Portugal still wants to mine its resources. “We have a responsibility to do so since we have the highest lithium resource [in Europe],” said Ana Fontoura Gouveia, Portugal’s secretary of state for energy and climate.

Fontoura said that there is a possibility that the land for the mine, which is owned largely by the community and private owners, could be expropriated but she hoped an agreement would be reached instead. That view is echoed by Savannah Resources.

“Portugal is a front-runner with adapting laws for environmental and social standards,” Fontoura said. “Critical raw materials have economic value and social value and we can fulfill that by high environmental and social standards. It’s important to convince [people] this is the way forward.”

 

Source: The Wall Street Journal

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