Serbia’s Strategic Lithium Summit: A New Chapter for Europe and the Balkans

A rather sudden and low-profile meeting took place in Serbia’s capital last week. A delegation composed of high-ranking European officials and influential business leaders traveled to Belgrade for the discreetly titled “Summit on Strategic Raw Materials,” organized by the Serbian government. The event culminated in a single memorandum of understanding. However, this was no ordinary gathering; Serbia welcomed A-list guests including German Chancellor Olaf Scholz, European Commission Vice-President for the European Green Deal Maroš Šefčovič, and chief executives from major European banks, such as the European Bank for Reconstruction and Development, KFW, and the Italian Development Bank. Notably, the CEO of German automotive giant Mercedes-Benz was also in attendance.

What, then, brought these prominent figures of European politics and business to Belgrade? The memorandum that Šefčovič signed with Serbian Minister for Energy and Mining Dubravka Đedović Handanović may represent a pivotal development for Europe’s green industry and, undoubtedly, for Serbia’s economy as it strives to join the EU.

In Serbia, the memorandum has colloquially been dubbed “the lithium deal.” Serbian President Aleksandar Vučić emphasized the significance of the agreement during a press conference alongside Chancellor Scholz and Vice-President Šefčovič.

The Lithium Potential: A Resource for the Future

Global mining giant Rio Tinto has explored the Serbian mountains for over two decades, initially in pursuit of iron and other metals. In 2004, however, the company discovered an extraordinary asset: a vast deposit of lithium. This newly found mineral, jadarite—named after the Jadar region of Serbia—contains an estimated 158 million tonnes of ore with 1.8% lithium oxide. If extracted from deep within the mountains, this deposit could potentially supply enough lithium for batteries to power 30% of Europe’s electric car production. The Serbian government has set an ambitious goal of meeting at least 20% of Europe’s lithium demand.

Setbacks and Renewed Hope

For Europe’s transition to green energy, the prospect of a significant lithium supply located at the heart of the continent is a reassuring development. Currently, most of the lithium utilized in Europe is sourced from Asia and South America. The COVID-19 pandemic, Russia’s invasion of Ukraine, and other global supply chain disruptions have highlighted the risks associated with reliance on distant supplies. Consequently, Europe has been eager to secure strategic resources closer to home. While mining opportunities exist in countries like Germany, Finland, Spain, Portugal, and the UK, Serbia’s project, which has been underway for two decades, is well ahead of the competition. Rio Tinto has already invested approximately $450 million (€415 million) in this endeavor.

However, as is often the case with mining projects, Serbia’s lithium initiative has faced significant challenges. The initial public outcry erupted when Rio Tinto acquired land and received governmental approval to commence mining operations. Politicians, environmentalists, and activists raised alarms over potential pollution, arguing that the unfamiliar processes involved could contaminate the region’s pristine waterways and soil. The backlash led to massive demonstrations and road blockades, catching both Rio Tinto and the government, which was approaching a pre-scheduled early election, off guard. In January 2022, licenses were revoked, effectively putting the project on hold.

Yet, the memorandum of understanding signed in Belgrade last week has breathed new life into the project.

A Quantum Leap into the Future

Both Serbian President Aleksandar Vučić and his European counterparts expressed their enthusiasm for the economic potential of the lithium project. Vučić acknowledged that while there remains a long way to go before the mine opens, the process will be transparent and devoid of hidden agendas. He stated, “This is crème de la crème of the European industry, and it is clear that we have brought Europe to Serbia.” He further expressed, “This day fills me with hope for our country. It is important for Europe, for Germany, but above all, for Serbia. It will mark a turning point, a great change, a quantum leap into the future.”

German Chancellor Olaf Scholz echoed these sentiments, portraying the initiative as a pathway for Serbia’s integration into Europe. “I must add that this is indeed a European project,” he remarked at the summit. “We need a European spirit, which is crucial for the future. I would connect my presence here with the clear support for the European integration of the Western Balkan countries.”

The potential for job creation is significant; upon completion, the mine is expected to employ 2,100 workers directly. However, concerns linger regarding whether these jobs are worth the environmental risks. Summit participants attempted to address public fears, particularly the apprehension that Serbia might sacrifice its environment for low-wage mining jobs and minimal financial returns from the mining fee, which stands at just 5% for the extracted metals. A viral social media post in Serbia depicted a frail child in tattered clothing, kneeling in the mud of an African diamond mine, captioned: “The kind of prosperity that mining for Europeans brings.”

Moreover, the Austrian newspaper Der Standard published an opinion piece criticizing Scholz for forging a deal with Vučić, suggesting that a new Western colony had emerged in the Balkans. The EU itself has recently scrutinized Vučić’s government, raising concerns about the rule of law in this EU candidate country and highlighting irregularities in the latest general elections.

To assuage public concerns, Vučić has vowed to prohibit the export of lithium from Serbia, stipulating that all entities wishing to utilize Serbian lithium must establish factories within the country. European attendees at the summit appeared supportive of this approach, with the term “value chain” becoming a recurring theme during discussions.

• “This project creates a new potential value chain and secures the possibility to create new jobs, not only in mining but in subsequent processing stages,” Scholz stated.
• “It connects Serbia to the future of mobility, which must be carbon-free. We are discussing a turning point for the mobility of the future,” he added.
• Vučić echoed these sentiments, asserting that the project would attract “at least €6 billion in new investment to Serbia.”

Furthermore, the UK ambassador to Serbia, Edward Ferguson, expressed confidence in the deal, stating it would transform Serbia into a green technology hub. “We are helping Serbia to acquire more than just lithium,” he noted. “We are examining how to build the value chain, ensuring that after lithium extraction, we have facilities for processing it into cathodes for batteries that will power the next generation of electric vehicles.”

Progress and Concerns: Can Lithium Mining Be Green?

Just days after the summit, another event in Serbia highlighted the potential of the value chain. In Kragujevac, often referred to as “Serbian Detroit” due to its automotive industry, Stellantis inaugurated a new production line and launched the first electric vehicle manufactured in Serbia, the Fiat Grande Panda. This production line will create 2,000 jobs. Stellantis’ executive director, Carlos Tavares, acknowledged the significance of the new lithium deal in relation to their operations. “The biggest weakness of electric cars is their affordability,” he stated. “So, I believe this is a positive development, and we are keen to be part of this initiative.”

However, the shadow of concern that previously mobilized the Serbian public against lithium mining still lingers: can the extraction of lithium be conducted without incurring severe environmental consequences? During the summit in Belgrade, all eyes were on assurances from Europe regarding the ecological sustainability of mining practices. Participants were acutely aware of this concern.

Šefčovič emphasized that the EU’s “clear intention” is to uphold the “highest environmental standards.” He stated, “We possess the most comprehensive regulatory framework. Each battery will have a passport—a QR code providing access to information on its carbon footprint, recycling guarantees, and the fair treatment of individuals in the value chain.”

Scholz underscored that the EU’s involvement would extend beyond mere regulatory frameworks. “We are not here merely to incentivize but to engage as partners in implementing environmentally responsible solutions, utilizing the expertise of our mining engineers,” he explained. “We will share the knowledge our experts have amassed over centuries, ensuring the success of our joint endeavor.”

The Chancellor assured that he had communicated to Rio Tinto executives that the project would only move forward if it complied with the highest environmental standards, receiving assurances to that effect. While environmentalists and local organizations in the Jadar region remain skeptical, fearing that water and food resources are Serbia’s true strategic assets, the Serbian government continues to grant exploration licenses to various mining companies, indicating that the lithium project is progressing at a rapid pace.