Why has Portugal’s prime minister António Costa resigned?

Key Points

• Portuguese PM António Costa has resigned amid a corruption investigation into lithium and hydrogen projects.
• Costa cited integrity concerns as he stepped down, leaving the president to decide government’s fate.
• It is the latest scandal faced by Costa’s administration since a controversy around state-owned airline TAP in January

Portuguese Prime Minister António Costa has resigned hours after prosecutors detained his chief of staff in an investigation into alleged corruption in his administration’s handling of lithium mining and hydrogen projects.

Costa, who prosecutors said was the target of a related investigation, announced the decision in a televised statement after meeting President Marcelo Rebelo de Sousa.

“The dignity of the functions of prime minister is not compatible with any suspicion about his integrity, his good conduct and even less with the suspicion of the practice of any criminal act,” Costa said on Tuesday.

It is up to the president to decide whether to allow Costa’s Socialists, who have a majority in parliament, to form a new government or to dissolve parliament and call an election.

Parliament was due to vote on the 2024 budget bill later this month. There are worries the political crisis could affect the budget approval as well as the kick-off of the privatisation of the Portuguese national airline TAP.

Prosecutors are investigating alleged graft and influence peddling in the Barroso and Montalegre lithium exploration concessions in northern Portugal, a project for a hydrogen plant in the port of Sines, and a mega data centre investment there.

The prosecutor’s office said five people had been detained as part of the investigation, including Vitor Escaria, Costa’s chief of staff, whose offices had been searched along with several government buildings.

It also said Infrastructure Minister Joao Galamba, who previously served as energy secretary, and the president of the environment agency APA, Nuno Lacasta, were formal suspects.

Costa said he was “fully available to co-operate” with the justice system.

APA this year gave the environmental approvals for local company Lusorecursos to extract battery-grade lithium in Montalegre and for London-based Savannah Resources to develop its own mine in Barroso.

Portuguese anti-mining groups said Tuesday’s developments were proof that mining processes had not been conducted in a transparent way, and they called for the “immediate cancellation” of all lithium projects.

Costa will remain in his job until the president’s decision following Rebelo de Sousa’s consultations on Wednesday and Thursday.

Since coming to power in 2015 after a debt crisis and international bailout, Costa has presided over strong economic growth during which his successive governments quashed the budget deficit and reduced the debt burden.