Portuguese Prime Minister António Costa submitted his resignation Tuesday after police raided his official residence and the country’s attorney general confirmed he was being investigated under a corruption probe for 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.

Costa said the gravity of the charges driving his investigation is “incompatible with the dignity of the office of prime minister,” making it impossible for him to continue in the post.

He said his conscience was clear, but he would not stand as a candidate for a fourth time as premier.

Costa made it clear, that he would not run for higher office, but he was willing to stay in his position until a replacement was chosen. According to him, his resignation signified "the end of a chapter" in his life.

On Tuesday, prosecutors announced that they were looking into concessions granted for producing hydrogen and lithium mines.

Now, Portuguese President Marcelo Rebelo de Sousa must choose between selecting a new prime minister from Costa's Socialist Party or dissolving parliament and holding fresh elections.

The office of the presidency confirmed that party leaders will be summoned to meet on Wednesday, with the Council of State, an advisory body to the president, expected to meet on Thursday.

The Socialists' president, Carlos Cesar, said his party was prepared for "any scenario" while Luis Montenegro, leader of the main opposition Social Democrats, said he was ready for an early election.

"The degradation of the government necessitates that no more time is wasted," Montenegro said.

Later this month, parliament was scheduled to vote on the budget bill for 2024. There are concerns that the political unrest may affect both the adoption of the budget and the start of the privatization process of the Portuguese national airline TAP.

Numerous government ministry buildings as well as Costa's home were searched by Portugal's national police. The sweeps are part of a corruption investigation connected to plans for lithium prospecting in the country's north and a massive green hydrogen project in Sines.

Vítor Escária, Costa's chief of staff, was also taken into custody, the attorney general announced earlier on Tuesday. Additionally, the Portuguese Environment Agency's Nuno Lacasta and Infrastructure Minister João Galamba were reported to have been indicted by authorities.

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.

They said they had become aware that the suspects used Costa's name and authority to "unblock procedures" related to the deals and the Supreme Court would look into Costa's possible role in the deals.

Portugal has been viewed as crucial to Europe's aspirations to control more of the battery value chain and reduce reliance on imports because of its estimated 60,000 metric tonnes of lithium reserves.

As part of the EU's larger effort to secure essential raw materials, Costa's socialist government has enthusiastically backed plans to extract lithium in various parts of Portugal. However, those projects have been bogged down in controversy because of the low quality of the material to be extracted and the disproportionate environmental damage expected.

The European Union is keen to reduce its dependence on mines in China, Africa, and South America for lithium and other raw materials needed for the green energy transition.

Image source: Reuters