By Victoria Waldersee and Catarina Demony
LISBON (Reuters) - Portugal's government came under fire from lawmakers on Wednesday for signing a contract giving exploration rights for lithium mining to a three-day old firm, but the environment minister said this won't stop mining of the metal.
During a heated parliamentary hearing, lawmakers from left to right voiced concerns about the legality of the contract signed in March between Lusorecursos Portugal Lithium and the government, and the environmental impact of the mines.
Portugal is Europe's biggest lithium producer, but its miners sell almost exclusively to the ceramics industry and are only now preparing to produce the higher-grade lithium that is used in electric cars and to power electronic appliances.
The government is finalising plans for an international licensing tender for lithium exploration to start this year.
The hearing was called after an environmental group filed a lawsuit on Monday seeking to cancel the concession contract for rights to mining in the northern municipality of Montalegre.
The group claimed the contract was illegal because the name on the contract is of another firm formed just three days prior, as opposed to Lusorecursos, the company which the government, then led by PSD's Pedro Passos Coelho, granted prospecting rights to in 2012.
Lusorecursos said the law states that a company can be created until the day the contract is granted. Responding to lawmakers at the hearing, Environment Minister Joao Matos Fernandes said it was "crystal clear" the government complied with the law.
The law in question, from 1990, states that an application must be submitted identifying the company, "incorporated or to be incorporated", seeking to obtain the license.
The leader of Portugal's People-Animals-Nature party Andre Silva criticised the move, calling it "yet another project by the Socialist Party destroying the environment in the name of economic growth".
Protest movements have emerged across the country as requests for prospecting pile in from domestic and international companies, expressing concern about irreversible environmental damage such as soil pollution to destruction of the natural habitat of various endangered species.
The government wants to make Portugal Europe's top producer of higher-grade lithium for electric car batteries, with the added perk of reducing dependency in the EU on imports from China.
"Europe has lagged behind China," Matos Fernandes said during Wednesday's hearing. "Portugal will be at the forefront of this project."
(Reporting by Catarina Demony and Victoria Waldersee)