Savannah Resources in talks with carmakers, sees Portuguese lithium in 2021

By Catarina Demony

LISBON (Reuters) - London-based mining company Savannah Resources <SAVS.L> said on Monday it was in talks with several major European industrial groups, including carmakers, as it gears up to start commercial lithium production in northern Portugal in 2021.

Portugal is Europe's biggest lithium producer, but its miners sell almost exclusively to the ceramics industry and are only now preparing to produce the higher-grade lithium that is used in electric cars and to power electronic appliances.

Savannah already mines feldspar, quartz and pegmatites in Barroso, a mountainous region in the north of Portugal.

In a statement sent to Reuters, Savannah said commercial production of lithium concentrate was scheduled to start in 2021, with the first full year of production in 2022 "to coincide with the anticipated increase in demand for lithium for European electric vehicle production".

"Savannah is in offtake and investment discussions with a number of major European industrial groups including car manufacturers and with a series of other international groups," the company said.

Interest in lithium mining has been spurred by expected growth in sales of electric vehicles, which are cheaper to run and more environmentally friendly than other cars.

But Portugal will face fierce global competition, and warnings of a bubble and oversupply have pushed down lithium prices.

The government is finalising plans for an international licensing tender for lithium exploration to start this year, despite objections from environmental groups.

Last month, hundreds of people protested in Lisbon against lithium mining. A petition signed by thousands said the Barroso project would cause irreversible damage, from soil pollution to destruction of the natural habitat of various endangered species.

Barroso was declared a world agricultural heritage region last year by the United Nations' Food and Agriculture Organization.

Portugal's biggest environmental NGO, Quercus, opposes any large-scale lithium exploration, warning that it would jeopardise the country's carbon-neutrality goals.

(Reporting by Catarina Demony; Editing by Andrei Khalip; Editing by Dale Hudson)