Energy companies Galp and Northvolt will develop an integrated lithium battery value-chain across Europe by building a lithium conversion plant in Portugal with an annual capacity of 35,000 tonnes.
The companies said they will establish a new company called Aurora to "develop opportunities" for the "fast-growing battery value chain."
The plant will start commercial operations in 2026. It will use a "proven conversion process," leveraging recent process improvements and technologies to increase sustainability and efficiency.
Additionally, the companies are seeking to enable green energy to power the conversion process and minimise reliance on natural gas.
They are also conducting technical and economic studies and looking at several possible site locations. A final investment decision has not been made, according to the companies, but based on similar projects; the plant could cost US$789 million (€700 million) and create 1,500 direct and indirect jobs.
Paolo Cerruti, co-founder and chief operating officer of Northvolt, said the European battery manufacturing industry provides "tremendous economic and societal opportunity for the region."
Cerruti explained that the agreement represents "a major investment into this area" that will position Europe with a path to the domestic supply of critical materials required to manufacture batteries.
"This initiative comes to complement a global sourcing strategy based on high sustainability standards, diversified sources and reduced exposure to geopolitical risks," Cerruti said.
Galp chief executive officer Andy Brown described the agreement as a "once-in-a-generation opportunity" to "reposition Europe as a leader in an industry that will vital to bringing down global CO2 emissions."
"To be successful in this drive, we must all work together, industry and decision-makers, with a sense of urgency, because if we do not claim this role today, others will," Brown said.