Savannah “will invest around €415 million in lithium in Barroso until production begins in 2028”

It could be the tipping point for one of the largest lithium mining projects in Europe, acknowledges Emanuel Proença. The CEO of Savannah Resources emphasises, in the ECO podcast “À Prova de Futuro” (Future Proof, in English), that after years of effort, the news that the confirmed resource in the Barroso Lithium Project – in Boticas, Vila Real – has increased by 40% and now stands at 39 million tonnes are “very encouraging” and come at a time “when things are really starting to happen”, with a view to begin the production of the metal crucial for electric car batteries in 2028.

The British company, which is listed on the AIM market, has invested €50 million so far this year and will invest €15 million in 2025 and a further €350 million by 2028, he said. The financing puzzle for this investment is likely to include a new capital increase on the stock market, an “interesting opportunity” for Portuguese investors to participate “in the future success of the project”. In July, a €5.6 million increase left 25% in the hands of national investors, including Lusiaves and Mário Ferreira, with 10% each.

Since Savannah took over the project in 2017, the operation has been the target of protests, legal action and even an injunction. Emanuel Proença believes that “this group of people managed to occupy the media space for many years and give the impression that the project could be dangerous, that it was frightening”. He explains, however, that “with a lot of work on the ground, it was demonstrated to the people of the region that these things were, at the very least, greatly exaggerated, if not truly malicious in their intentions and content”, and separates “the actions of the opposition group from legitimate concerns that must be addressed”.

Savannah is a British company created in 2010, which in 2017 bought the Barroso Lithium project in the municipality of Boticas, in the district of Vila Real. What characteristics led the European Commission to consider the project strategic this year under the Critical Raw Materials Act?

Savannah has, as you say, been around for 15 years and, over those 15 years, it has actually had two sub-lives. In the beginning, in its early stages, like many other resource companies, it sought out interesting opportunities all over the world. The mineral resource exploration sector is very competitive and very high risk in the early stages of project development. It is now in a new phase, which is the phase in which it understands that the Barroso lithium project is a large-scale project that can be developed and brought into production and that it needs to accelerate. In this second part of its life, which begins in 2017 and with all the work from 2017 to 2025, it is overcoming technical barriers to reach a complete understanding that this is a very solid project, both from an economic, social and environmental point of view, as well as in terms of opportunity, and that it must therefore be implemented. In this second phase, it has invested around €50 million. This year, it is investing another €15 million and next year, with the start of construction, it will invest several hundred million euros. It is exciting to take a company to this stage of implementation.

Is this the so-called tipping point?

Exactly. This is the stage when things really start to happen. The Savannah project, like many projects in this sector, often becomes famous even before it can show evidence of what it is doing, as it takes many years.

It’s all over the news…

That’s right. I’m talking about 50 million euros spent over the years, and until recently, people on the ground didn’t see it because it was very technical work, underground prospecting and so on, so it was difficult to make it tangible. As we move forward and reach the stage where we start hiring locally, where we start renovating houses in the villages, where we start seeing people returning to the region after many years of immigration and therefore reuniting families, and where we can speed up the hiring of services in the region as well, everything starts to look different.

Everything starts to happen.

And that is where we begin to see what we see several years later, or several decades later, in situations that are familiar to the Portuguese, such as Castro Verde, which has had a copper mine for many years. Copper is quite different from a mineral and exploitation point of view, but this mine has brought prosperity to a municipality in the interior that had difficulty maintaining its population and generating wealth. The Francisco Manuel dos Santos Foundation report came out, I believe last week, talking about all Portuguese municipalities, how they compare, and Castro Verde was the municipality with the highest average salary in the country. So we are not talking about a municipality that is highly rated, we are talking about a municipality that is the highest rated in this metric. Today, Boticas is beginning to see the first, very early signs of what it means to have a project like this, well developed in the region. So, it is obviously very exciting to begin to demonstrate, in practice, what a project like this can bring to the region, in addition to what it brings to Portugal and the world.

Last week, Savannah announced that the confirmed resource in Boticas had increased by 40%, now standing at 39 million tonnes. The total potential could exceed 100 million tonnes, enough to produce 47 million electric vehicles, or eliminate the oil consumption of the entire car fleets of Portugal, France and the Netherlands. These are very large numbers. Is this realistic?

It is factual. It is as simple as it is factual. Therefore, it is mathematical what is transformed from lithium and what corresponds to batteries with current technology. If the technology becomes more efficient, the number will obviously rise even further. But with current technology, this is the equivalence we are seeing here. And that demonstrates the opportunity that exists here for the region and for Portugal. Basically, in one element, we can make a difference, not only on a Portuguese scale, but also on a European scale and, in a certain perspective, on a global scale. And so, that is very encouraging. But the fact that we have a greater resource within the same area of work says more, brings more important things. First, it attracts more potential foreign investment to Portugal. As I said, I was just leaving a conference today with 350 players in this sector from all over the world. There were Japanese, Koreans, Chinese, Americans, Swedes, Finns, Germans and so on.

Are you saying that there are more people interested in investing in the sector?

The more anchor projects this sector has, the more it will be able to attract interest from others over the years. And that’s good, it’s good for Portugal, because it brings more prospects for us to grow this opportunity for more jobs across the country and more opportunities for development. The second thing it does, which is also very important, is to demonstrate what we have been saying for some time, but that people who are a little more sceptical or a little less willing or eager to accept the argument have been saying ‘no way’. ‘They come here, they exploit it for a few years and then they leave, and everything goes wrong.’ Well, this proves what we have been saying. This is a project that will last for generations. So, if there is an opportunity, if there is a market, it is a project that will last for generations. And that is very important, because it brings sustainable development over generations. The people who are returning are coming back to stay and make a life, to bring their families. This weekend we brought a family from Australia who are moving to live between Lisbon and Boticas. Just last month, we brought back a family, people who were from the village, who are returning after many years away with a baby, and that is also very important and encouraging for us, to live in the village, to return to the village and reunite a family. So that is the second part that is important. And the third is value. And value is measured in terms of value for our employees, for our shareholders, for the State, in taxes, in royalties, and for the region and the municipality.

You mention job creation, tax payments, royalties. First, could you qualify what you mean by more? You say you are going to create more of all this, but it’s a bit vague.

Quite right.

Will this new information increase or accelerate the investment plan? You said that Savannah has already invested €50 million since the concession, will invest another €15 million this year and then hundreds of millions more. What are the total amounts involved?

Very well. Regarding the last part of the question, what we have ahead of us is to finalise the detailed engineering, finalise the project finance, structure the project financing in its entirety and start construction in the second half of next year. As soon as we start preparing for construction and begin to purchase more expensive equipment, which takes longer to make, which is custom-made, things like that, we will begin to accelerate an investment plan that will last about 18 months and will be in the order of 300 to 350 million euros. So, that is the investment needed to get the project up and running.

Will that be the total above what has already been invested?

Exactly, it is additional to what has already been invested and is what will take us to production there in early 2028 and from there to all other effects.

So, the total investment will be around 415 million euros?

Exactly, it’s around that.

Until production starts?

Until production begins, that’s right. After that, there are always optimisations to be made. Then there are adjacent investments, because there are other opportunities. Let me give you an example. Our project doesn’t just produce spodumene, which is the basis for lithium, it also produces a lot of feldspar. Feldspar is very important for the ceramics industry, an industry in which Portugal also has an interesting position. And so, in order to work with this feldspar properly, there may be an opportunity for multiplication that requires a little more investment afterwards. These are other adjacent opportunities that will arise later, already in the operational phase. The other part of the question was to try to shed a little more light on how much more in the other metrics, both in the “jobs” metric and in the “taxes, royalties and the like” metric. Based on the previous study – the study that is now being reviewed in this final engineering phase, the business plan study, i.e. the financial study – we had already discussed the potential size of royalties for the municipality, as one of the parts of the royalties associated with this project. We had talked about close to 10 million euros per year. This is a figure that fluctuates greatly over time, because it depends on production, but even more so on international market prices. However, it gives an idea of the value of the royalties component. The royalties component is only one part of the benefit to the State, because this is the part of the royalties for the municipality. Then there are royalties for the central government, and then there are all the taxes associated with the project, from direct to indirect. Therefore, we are talking about hundreds of millions of euros per year in estimated revenue for the State, repeated over the many years that the project will last. It is a significant and interesting amount for the public purse as well. On the employment side, we have already mentioned the estimated size of the direct team for the project. We are talking about around 300 to 350 permanent direct jobs in the project over the decades. Added to these are indirect jobs, so there is a lot of subcontracted work, for example, transporting the project to other factories, to customers or to port areas or similar. And then there are so many other indirect jobs that are generated in a region that will once again have more restaurants, more health and education infrastructure, workshops and so on. This figure is estimated by the University of Minho, based on a study conducted two or three years ago, at around one thousand to two thousand additional jobs. For a rural municipality such as Boticas, this is very, very significant. And our expectation is that these jobs will be filled by people who will live in the region, and therefore, between Boticas, Ribeira de Pena, Chaves and other municipalities in the region, which share characteristics similar to those of Boticas and which, therefore, will have an opportunity here to “re-energise” their local economy a little.

You made a capital increase a few months ago, in July, of 5.6 million euros. Will another be necessary for this new phase?

I think Portugal has become a little unaccustomed to having companies that are listed from the outset and always take their projects to the capital markets. Savannah is a company that started out listed and has therefore been listed on the stock exchange for 15 years. The most relevant aspect associated with the listing, in terms of the performance of the listing associated with this project, is mainly in recent years. First and foremost, this means an interesting opportunity for us Portuguese to participate in the future success of the project. In the success and future risk of the project, of course. Everything on the stock market has elements of risk and return. But this is an important and interesting element, I would say, of this project, because it allows everyone to participate in its future. We have already seen many Portuguese people taking a stake in the company over the last few years, and we are already above 25% of the company’s shareholding structure in the hands of Portuguese shareholders.

As a reference?

Both reference and retail, as well as some institutional investors. And so this is encouraging for us and encouraging for the Portuguese. Those who follow the Portuguese stock market know that there are many listed companies in Portugal that do not have such a large Portuguese shareholding. This is encouraging, and it was even more encouraging in the last capital increase, where we made more than 42% of the capital increase with Portuguese participation. This is good, it helps us to be confident that we are doing something good for all Portuguese people. Over the coming period, yes, the structuring of project finance involves resorting to other sources of financing that complement the effort already made by shareholders, because this effort has so far been made entirely by shareholders. Therefore, we will have a debt structure component, we have a component of either prepaid off-takes or other grants to support sunk costs. All these elements now form a puzzle that will make up the investment.

The bulk of the investment is coming now.

Exactly. And within that, yes, it is possible that, at some point, there will also be another opportunity for shareholders to enter, if we make another capital increase on the stock exchange.

When we talked about ESG, we talked about three areas. We are talking about mining projects, which, for better or worse, are always the focus of attention. They always have environmental consequences in the places where they operate, and Barroso has been no exception. There have been protests, legal actions, and even an injunction this year. There are several criticisms of concessions signed on the sly, so to speak.

I don’t think there are any on our side, but it’s just to give you an idea, because there are always those who want to mention it.

[There is criticism] of disregard for environmental consequences. How is the company managing this? What message does it send?

It is no secret that there is a group of people who oppose the project and who are viscerally opposed to it.

Why so viscerally? Were you expecting that?

You have to ask them. I have my theories and my ideas, and our team knows them well and therefore knows quite well what motivates them, but it’s not my place to say. It’s also no secret that this group of people managed to occupy the media space for many years and give the impression that the project could be dangerous, that it was frightening. And, as I said, projects take many years to develop and show what they really bring to the region, so that period was fertile ground for conspiracy theories and fears to begin to spread. I think that with these last two years of work, with a lot of work on the ground, it has been demonstrated to the people of the region that these things were, at the very least, greatly exaggerated, if not truly malicious in their intentions and content. And so, I separate the actions of the opposition group from legitimate concerns that must be addressed. These legitimate concerns are what we have been talking about over the last two years and what we have demonstrated through our good work. As you rightly say, any project, whether it involves building a house, constructing a factory or developing a mine, has consequences, and it is clear that these consequences exist. This is a large-scale project, and therefore it also has consequences. However, there were concerns about the lack of local employment. We are demonstrating that these local jobs are already coming, as part of our team is already made up of local people, as I mentioned a moment ago. There were concerns about water use, for example, the use of water from the Covas River, which is a tributary of the Tâmega, but is the river of that valley. And so, as it is a stream and a river in that valley, it is important to preserve and monitor it. Our project does not touch the water from the Covas River, it has its own water collection and a closed water system, so it recirculates its water and has no impact on the middle of the course. There were and still are concerns about effluents in these projects, because there are projects that mine other minerals that generate, for example, acidic water. This does not happen with lithium. What we work with is chemically inert, and what we use are mainly chemicals, such as oleic acid, which is a base ingredient in olive oil. These are therefore well-known and well-controlled elements. And so, the fear is one that makes our technical teams work very hard and in great detail, but it is not a fear that has any basis in reality. And then there was the fear of movement and, of course, in a valley where there are very few inhabitants today, far fewer than there were 30 or 40 years ago, there will obviously be more inhabitants again, there will be more movement again and there will be lorries circulating, although they will not circulate in the village, they will circulate in the region. It is clear that this will bring more movement. What I hope and believe is that this movement is good for the region and will bring back the dynamism that the region so badly needs.

How is your relationship with the State, particularly the local authorities?

Relationships are built on trust and action. And so, as we take action and demonstrate what we are doing in the region, I would say that even the most difficult relationships are normalising and the best ones are getting better and better. I was therefore very honoured and pleased to have been able to take part in the Nossa Senhora da Livração festivities in August, with my daughter by my side, no less. I am extremely proud that our team was able to participate in the summer life of this municipality, as are the municipalities in the interior. It brings many, many immigrants back at this time of year. I am pleased to see that with all this we are building more and more of a relationship, which is not a relationship between the company and the region, but a relationship between the region and the reality of the people within the company. The team is part of the region and is a team that believes in its future and wants the best for its future. Therefore, all other institutional relationships are also growing, running in the most appropriate way, today and increasingly in the future, with more collaboration, so that some of the collateral elements of the project are also very good for the region. And I think that is happening more and more.

This podcast is about technology, so I want to ask you about your approach to technology, what investments you make, what innovations you need and what you use.

A mining project in 2025, I believe, has almost nothing, if anything, to do with a project from 1925. Today, robotics has a lot of influence on the work that is done in the field. Today, automation is absolutely critical. Our project, our industrial plant, has sensors everywhere, a lot of automation, and a lot of associated technology. We are bringing in some technological solutions that only exist in the best mines in the world, those that have been operating for a long time and that make the entire process ultra-optimised. Each additional percentage point of recovery is an additional percentage point of value. Each additional percentage point of control of some critical elements of the project is an additional percentage point of very important efficiency. We no longer work with pickaxes, we no longer work on the ground, we work with large industrial machines that also have a number of automation elements. The people who work on these projects are highly qualified, and therefore also have salaries that are commensurate with their skills. So, as I mentioned earlier, we brought a family over from Australia to bring the best know-how to the region. We brought people back from emigration. People emigrated because they had better conditions in France or the United States than they had in that region. For them to return, they obviously have to see corresponding conditions. And so, today and in the future, this is a project that will rely on a great deal of technology. Even today, at that conference, there were several equipment suppliers, including some of the largest technology companies in Europe and the world, and we talked about some of the technological solutions that will be used and brought to the project. So, yes, this is an advanced technology project, despite being at the first point in the chain, in the primary sector, and this sector is one of ultra-advanced technology in many components. I think Portugal still has some know-how associated with some of the elements that are accessories that can be transferred to this sector. I am thinking, for example, of all the knowledge of chemistry in Estarreja, which can be transferred to a refinery, as is the case with Lifthium. Therefore, all the knowledge of electrolysis will be very important for the Lifthium project. I am thinking of the knowledge we have in some factories in the Águeda region, which work in isolated chambers, low pressure, in microtechnologies, which are very important for some industrial processes, in batteries and so on. And so, I think that with this sector, we can strengthen the skills that already exist in Portugal and bring them to the level of perfection required by competition in the global market in a sector such as this.