Portuguese Prime Minister Costa steps down amid lithium, hydrogen corruption scandal

The Supreme Court of Justice of Portugal is looking into the role of António Costa, who resigned as prime minister after several high-profile arrests, in the development of controversial lithium mining projects and approvals for investments in green hydrogen and a data center.

Portugal is Europe’s biggest producer of low-grade lithium – not the kind used in batteries. The country’s substantial reserves have attracted several major investments in mining and processing facilities over the past decade. But the rush to complete administrative procedures for the production of battery-grade lithium and the potential environmental and social impact caused much controversy.

Now it has culminated with the resignation of Prime Minister António Costa, after the Public Prosecution Service conducted a search of 17 private properties, five law firms and 20 government and company offices. The authorities, looking into corruption allegations with regard to lithium mining concessions, a green hydrogen project and a plan for a data center, made several arrests.

Close allies of Prime Minister Costa arrested

The Supreme Court of Justice is separately analyzing Costa’s role. His chief of staff Vítor Escária was apprehended, as was a close friend, lawyer Diogo Lacerda Machado, who was involved in the Start Campus data center investment in Sines in the country’s south.

The project was supposed to run on renewable electricity. Two executives from Start Campus are in custody, too. The police arrested the Mayor of Sines Nuno Mascarenhas as well. The same town hosts the H2Sines green hydrogen cluster project.

Investigators raided Costa’s offices, ministries and the Municipality of Sines

Minister of Infrastructure João Galamba and President of the Board of Directors of the Portuguese Environment Agency (APA) Nuno Lacasta were declared suspects. Costa was elected prime minister in 2015.

Among the premises that the investigators searched are the prime minister’s official residence, the ministries of the environment and climate action and infrastructure and the Municipality of Sines.

Irony is that EU wants to speed up permitting

H2Sines is backed by energy companies including REN, Martifer and Vestas, according to media reports. The government supported its bid in 2020 to be added to the list of the European Union’s important projects of common European interest (IPCEI). EDP and Galp quit the endeavor two years ago.

The consortium plans to set up electrolyzers with a total capacity of 100 MW for the production of green hydrogen and to export it to the Netherlands.

The investigation includes the approvals related to the lithium concession agreements with domestic company LusoRecursos for the Romano mine and London-based Savannah Resources for its Barroso project. They are both in Portugal’s north, near the Spanish border.

The irony is that the EU and many member states are pushing for the permitting process for mining and renewable energy investments to be rapidly accelerated, as part of the decarbonization efforts. The projects to mine lithium and other minerals considered essential for the energy transition are angering environmentalists and the affected local population in Europe, but also in North and South America. As for renewables, the biggest debates have evolved about the use of agricultural land and protected areas for ground-mounted solar power plants.