Portugal has the largest reserves in Europe of lithium, the main element in the batteries that power electric cars.
The factory in the coastal town of Sines, around 100 kilometres (60 miles) south of the capital Lisbon, is due to become operational by the end of 2025.
It will "serve the strong customer demand, mainly in the automobile industry," APA said on its website.
A public consultation on the project is due to run until the end of February.
The two billion-euro ($2.2 billion) CALB project would include the construction of five buildings and create around 1,800 direct jobs, Portuguese media said.
APA has already approved, under certain conditions, two lithium mining projects in the north of the country despite objections by environmental NGOs and many local residents.
Most electric vehicle batteries are currently lithium-ion batteries fabricated using lithium, cobalt and nickel.
Replacing internal combustion engine vehicles that rely on fossil fuels with electric ones is part of the green energy transition that is high on the global agenda.
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