Thewesternbalkans
In Serbia, the discussion continues regarding the renewal of lithium production for the needs of Germany and the EU. Rio Tinto’s activity in Serbia remains a hotly debated topic, with a balance between economic benefits and environmental risks.
The lithium deal between Serbia and the European Union was signed on September 22, 2023 during a meeting in New York. The MoU includes a strategic partnership for critical raw materials and production chains for batteries and electric vehicles. This cooperation aims to integrate Serbia into the EU’s single market and provide critical raw materials such as lithium for European industry. This initiative is part of the EU’s attempts to reduce its dependence on lithium supplies from China and develop local sources of critical raw materials, important for the green transition in Europe. The European Union and Serbia formalized on 19 July 2024 an agreement for a lithium mining project during a “critical raw materials summit” in Belgrade. The signing of the lithium deal with the EU and President Vučić’s promise not to sell lithium to China will help the EU reduce its dependence on China. Brussels also hopes the lithium deal will distance Belgrade from China and Russia.
British-Australian Rio Tinto is a global mining corporation with multiple operations around the world, including in Serbia, where the company is best known for its lithium mining project.
Main aspects of Rio Tinto’s activities in Serbia:
- Yadar Project: The company’s most famous project in Serbia is the Yadar project, which is located near the city of Loznica, in western Serbia. The project aims to extract lithium borate, a mineral rich in lithium and boron. It is one of the most well-analyzed deposits in Europe, with studies going back 20 years. It has a confirmed 158 million tons of lithium borate. The mine could be one of the largest in Europe for lithium and boron extraction, making Serbia an important player in the global lithium market. According to experts, Serbian lithium reserves can cover around 90% of current European needs for this metal.
The project, led by Rio Tinto, will include both mining and processing of the raw material, which will create conditions for local production of batteries and electric vehicles. It is expected that this will generate significant investment and create around 20,000 new jobs. Mining could provide enough lithium to make batteries for more than 1 million electric vehicles a year.
Rio Tinto has already invested $300 million in the project, which Serbia has returned after the imposed moratorium on the project.
- Environmental controversies: Rio Tinto’s operations in Serbia have caused considerable controversy. Local communities and environmental organizations oppose the mining project due to concerns about potential environmental harm, including contamination of water resources and destruction of agricultural land. Protests in 2021 and 2022 led to the project being delayed and revised. Rio Tinto acknowledges some valid concerns of local residents and environmental organizations and is making efforts to improve production methods.
- Government responses: As a result of the protests and significant public pressure, in January 2022 the Serbian government announced that it was terminating the Rio Tinto project, withdrawing all permits and documents related to the development of the mine. Despite protests and a freeze on the project, in 2024, the Serbian government resumed work on it after the Supreme Court overturned the ban.
Serbian President A. Vučić is making various marketing moves to calm public unrest and give the government’s decision a democratic look: he created a group of experts to assess the benefits and harms of lithium mining and even moved his office to Loznica at the beginning of September for a week to be closer to the people and discuss lithium development.
The Speaker of the Serbian Parliament, Ana Brnabić, has included in the parliament’s agenda a bill to ban the mining of lithium and boron, proposed by 86 MPs from the opposition, but the consideration of the law is still dragging on.
Brnabić pointed out that it was those who are now in opposition who brought the company Rio Tinto to work on the lithium deposits back in 2001 (that is, during the time of President Vojislav Koštunica – Democratic Party of Serbia). Under President Boris Tadić of the Democratic Party, Rio Tinto was given geological exploration rights for lithium deposits (2004) and Serbian laws were amended (2006 and 2011) to give more rights to the foreign company. The current opposition, Brnabić claims, in 2012 included the company’s name in the National Strategy for the Use of Resources in Serbia, declaring lithium to be Serbia’s greatest wealth, and now they want to ban geological exploration for lithium and boron.
- Economic effects: Lithium is a strategic resource for electric vehicles and renewable energy technologies, which makes the project economically attractive for Serbia. The country contains 1.3% of the world’s known reserves of the metal, which is essential for the production of batteries for electric vehicles. The estimated value of Serbia’s lithium is about €4bn. If the Yadar project is realized, it would bring significant economic benefits to Serbia, such as creating new jobs and increasing revenues from the mining industry.
However, there are also concerns that lithium may lose its importance as a strategic resource, if the price of lithium on the world market falls. Lithium is not a rare metal, with China holding the largest reserves. Europe is creating a consumer market for lithium, but the global market is growing rapidly, along with the emergence of numerous new mining, beneficiation and processing plants. All this leads to a tendency for the price of lithium to stabilize for the foreseeable future.
Serbia could develop lithium mining as a national rather than an international project. Serbia, which is a country with a favorable investment climate and a balanced foreign policy, could attract foreign investors possessing lithium extraction technologies. In this way, the trap of the banana republic, which the Serbian opposition particularly warns against, will be avoided.
- Politicization: In the heated discussion about who is behind the protests against the lithium deal in August 2024, some Western media and organizations find a “Russian trace”. Russia has been accused of trying to break the natural ties between the pro-European opposition and EU member states.
According to The Wall Street Journal, the $2.4 billion lithium mine is caught between Russia and the West, and the US suspects that Rio Tinto’s project in Serbia has suffered from a Russian disinformation campaign. According to the United States and Germany, Russia is likely to play a major role in fueling opposition to the project, which aims to undermine the development of what could become a key source of lithium for European carmakers. It is important for Moscow to maintain influence in the strategically important region of the Western Balkans by preventing Serbia from establishing closer ties with the EU.
Serbian society is highly polarized regarding the mine. The protest groups in the country are too diverse to claim unequivocally that the protests against lithium mining in Serbia are anti-Western in nature. It is normal for people to be alarmed by the prospect of ecological catastrophe in the natural environment in which they live and for popular anger to be directed against the government. The majority of the Serbian population is concerned that lithium mining could harm the country’s ecological situation.
The scale of the protests in Serbia against the Rio Tinto project has reached unprecedented levels in mining sector. The interesting thing is that the activities of the Chinese company Serbia Zijin Mining, which operates copper mines in eastern Serbia and promises to make the country the second largest copper producer in Europe, do not cause protests among the Serbian population, despite the obvious environmental damage.
According to some analysts, the German foundation of the Christian Democratic Union “Konrad Adenauer” has financed protests against lithium in Serbia in 2021-2022. Sponsors of the foundation are German concerns – competitors of Rio Tinto in the development of lithium. BMW, Mercedes and BASF are not direct producers of lithium, but these companies are actively involved in initiatives to sustainably supply raw materials for batteries. They also invest in research and partnerships with companies developing lithium projects.
Behind Rio Tinto, which originated from the Rothschild empire, are the interests of the world’s big capitals. The price of the company’s shares in the short and long term is in an upward trend. In addition to the largest shareholder in Rio Tinto – the Chinese company Chinalco with a share of 18.5%, American, British, Australian and offshore companies also have shares in it.
- Geopolitical balance: The lithium deal, like the deal for the French Rafale fighter jets, binds Serbia more closely to the West and Western technological standards. In September, Belgrade signed an agreement with the US to promote investment in the country’s energy sector.
At the same time, Moscow’s energy interests in Serbia are preserved, and preparations are underway for the continuation of the contract for the supply of Russian gas. The main sponsor of one of the two major Serbian football clubs – “Red Star” is the Russian Gazprom.
In parallel, Serbia is strengthening cooperation with energy companies from China, which is investing massively in infrastructure projects in the country. However, for China, Serbia is not a critically important partner for securing the lithium resource. China, like European countries, is interested in extracting resources but indifferent to political issues. China has a large enough stake in Serbia’s raw material development and exports that it is not Belgrade’s preferred lithium partner.
Currently, there is little or no hope for a possible compromise on lithium mining in Serbia. Local residents have no faith in either Rio Tinto or state institutions. President A. Vučić, a former protégé of Angela Merkel, declared that he would not abandon the project, but he might try to distance himself from Rio Tinto. The Serbian government is currently maneuvering and has announced that the project will take two more years of various approvals before final approval is given.
Serbia has not given up on the European path and is implementing its EU integration program. It joins the EU’s common energy strategy as well as the EU’s technological transition strategy. In addition, the number 1 investor in the country is Germany.
Regionally, Vučić is getting support from Viktor Orbán for lithium mining. Serbia is moving closer to Hungary, which is becoming a sub-regional factor in the production and logistics of electric vehicle batteries.
As serious as the protests in Serbia seem, the scale of the danger of a “color revolution” in Serbia has been greatly exaggerated. The ruling party has a consolidated electoral resource. On the other hand, the Serbian opposition is very weak and it does not aim to overthrow Vučić, but to expand its own electoral body.
The implementation of the lithium project is closely related to the geopolitical orientation of Serbia. Currently, the largest investments in Serbia come from Europe – Germany, France, Italy, but from Russia and China, Belgrade receives support for territorial integrity (Kosovo). For the current generation, Kosovo is of prime importance, but will it be so for future generations?
Foto: 123rf.com
