By Catarina Demony

LISBON (Reuters) – A municipality in a lithium-rich area of northern Portugal said on Thursday it would file a lawsuit next week to stop London-based Savannah Resources from developing four open-pit mines, adding that an ongoing corruption scandal related to “green” energy deals had given a boost to its fight.

Portugal’s Prime Minister Antonio Costa stepped down on Tuesday after prosecutors detained his chief of staff and named his infrastructure minister as a formal suspect in an investigation into alleged illegalities in the government’s handling of lucrative lithium and hydrogen projects.

With more than 60,000 metric tons of known lithium reserves, Portugal is Europe’s biggest lithium producer, but its miners sell almost exclusively to the ceramics industry.

They are now preparing to produce the higher-grade lithium for batteries as Europe seeks to develop its own strategic energy resources to reduce dependence on China and other suppliers.

Environment agency APA earlier this year gave environmental approvals for Portugal’s Lusorecursos to extract battery-grade lithium in northern Montalegre and for Savannah Resources to develop mines in Boticas, also in the north.

Savannah said it was cooperating with authorities, which visited some of its locations, but that neither the company nor anyone of its staff was a target of the investigation.

Boticas Mayor Fernando Queiroga told Reuters his team was finalising a lawsuit against Savannah’s mining plans it initiated after APA’s environmental approval in May, and aimed to file it next week.

APA President Nuno Lacasta has also been named a suspect in the ongoing investigation. APA confirmed its offices have been searched as part of the investigation and said the approvals process complied with the law.

“Naturally, we will now include (in the lawsuit) the news that has come to light,” Queiroga said. “There’s no doubt this has given us more arguments and more strength.”

Savannah said it “has and always will conduct its business in a fully lawful and transparent manner”.

Lithium projects have faced strong opposition from local residents and environmentalists. They say the processes lacked transparency and have warned of “dangerous promiscuity” between decisionmakers and mining companies.

Portuguese anti-mining groups have urged authorities to suspend and review all lithium projects while authorities carry out the investigation.

(Reporting by Catarina Demony, editing by Aislinn Laing and Tomasz Janowski)

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