Germany’s export credit agency, Euler Hermes, has signed a non-binding letter of interest for a loan guarantee of up to $270 million to support Savannah Resources in developing the Barroso lithium project in northern Portugal. The guarantee covers 80% of a loan, making it an attractive proposition for Germany’s KfW IPEX-Bank and other financial institutions. KfW IPEX-Bank, a key development partner, has played a pivotal role in facilitating this process.
This initiative reflects Germany’s and the European Union’s urgency to establish a domestic lithium supply chain and reduce dependence on imports, primarily from China, which currently supplies 97% of Europe’s lithium. Emanuel Proença, CEO of Savannah Resources, highlighted the importance of the move, linking it to the recently enacted European Critical Raw Materials Act. The legislation mandates that 10% of the EU’s critical raw materials must be sourced domestically and 40% processed within Europe by 2030.
Savannah’s Barroso project, situated about 145 km from the deep-water port of Leixões near Porto, is a cornerstone of Europe’s efforts to bolster its lithium supply. A 2023 scoping study revealed the project’s potential to produce 26,000 tonnes of lithium carbonate equivalent annually over a 14-year lifespan, with an after-tax net present value of $953 million and a robust internal rate of return of 77.3%.
Despite current lithium market oversupply and plummeting prices, Proença predicts a market rebound by the time Barroso begins production in 2027. He noted a likely deficit in lithium supply from 2027 onwards, supported by strategic developments such as the opening of AMG Critical Materials Group’s lithium hydroxide refinery near Berlin.
The loan guarantee follows Savannah’s strategic partnership with AMG, which secured a 15.8% stake in the company and an annual offtake of 45,000 tonnes of spodumene concentrate for five years, with potential extensions.
The Barroso project aligns with Europe’s broader commitment to building a sustainable battery value chain, as evidenced by similar initiatives across Serbia and the U.S., including significant funding for Lithium Americas’ Thacker Pass-project in Nevada.
