Lithium Mining in Ukraine and Portugal: Navigating Geopolitical and Environmental Risks for Strategic Mineral Gains

The global shift toward renewable energy and electric vehicles (EVs) has turned lithium into a strategic commodity, with demand projected to quadruple by 2030. Amid this surge, Ukraine and Portugal have emerged as critical players in Europe's lithium landscape, offering significant reserves but requiring investors to carefully balance geopolitical and environmental risks against the promise of high returns.

Ukraine: A High-Risk, High-Reward Play

Ukraine's lithium reserves—estimated at 500,000 tons—could position it as a major supplier, particularly if its Shevchenkivske deposit (14 million tons of lithium oxide) is developed. However, the nation's ongoing conflict with Russia creates unique challenges. The Dobra deposit, for instance, holds 5 million tons of lithium but lies in Russian-occupied territory, rendering it inaccessible.

The U.S.-Ukraine Minerals Agreement, finalized in April 2025, aims to unlock Ukraine's potential by creating a joint investment fund. Under this deal, 50% of lithium revenues will go to the fund, with the remainder benefiting Ukraine's reconstruction and defense sectors. U.S. firms like TechMet (a government-backed energy firm) and a consortium led by billionaire Ronald S. Lauder are vying for mining rights.

Yet, risks loom large. The war's uncertain timeline, infrastructure gaps, and lack of domestic lithium-processing facilities (forcing reliance on exports for refinement) could delay production until post-2035.

Investment Takeaway: Ukraine's lithium plays are suited for investors with a long-term horizon and tolerance for geopolitical risk. The potential payoff—positioning Ukraine as a major European lithium supplier—could offset short-term volatility.

Portugal: A Stable, but Not Risk-Free, Opportunity

Portugal, Europe's largest lithium producer, boasts 60,000 tons of proven reserves. Key projects include Savannah Resources' Mina do Barroso, expected to start production in 2027, and Lusorecursos' Montalegre Project, aiming for vertical integration in lithium processing. Portugal's stable governance and alignment with EU environmental standards make it an attractive option.

However, challenges persist. Lithium prices fell 45% in 2024 due to Chinese overproduction, and projects like Barroso face local opposition over environmental concerns, such as water contamination and habitat disruption.

Portugal's EU-backed strategy to secure critical minerals aligns with its climate goals, but investors must monitor regulatory delays and lithium price fluctuations.

Investment Takeaway: Portugal offers lower geopolitical risk but requires vigilance on ESG compliance and market volatility. Investors seeking stable lithium exposure should prioritize projects with strong environmental safeguards and diversified revenue streams.

Balancing Risks: A Strategic Framework for Investors

1. Geopolitical Risk Mitigation:
2. Ukraine's reliance on U.S. and EU partnerships reduces but doesn't eliminate risks. Monitor diplomatic developments and conflict timelines.

3. Portugal's stability is underpinned by EU integration; however, Brexit-like disruptions could indirectly affect supply chains.

4. Environmental and Social Risks:

5. Ukraine's lack of processing infrastructure may lead to partnerships with European refineries, mitigating some environmental concerns.

6. Portugal must navigate local opposition through transparent ESG practices, as seen in the Neves-Corvo copper mine, which succeeded via community engagement.

7. Market Dynamics:

8. Lithium oversupply from China continues to pressure prices. Investors should target projects with cost efficiencies (e.g., Portugal's Montalegre) or strategic partnerships (e.g., Ukraine's U.S. deals).

Final Recommendation

• For Aggressive Investors: Allocate to Ukraine's Shevchenkivske project via TechMet or Lauder's consortium, but pair with geo-hedging instruments (e.g., conflict insurance).
• For Conservative Investors: Focus on Portugal's established players like Savannah Resources, while tracking ESG compliance metrics.

The lithium boom demands a nuanced approach: Ukraine offers outsized rewards for risk-takers, while Portugal provides a safer bet with growth potential. Investors who blend these opportunities with rigorous risk management will be best positioned to capitalize on Europe's lithium revolution.