Serbian politicians on Friday attacked environmentalists for forcing them to abandon Rio Tinto's proposed $2.4 billion lithium project, warning that the move could hurt economic growth and diversification efforts in the Balkans.
However, after the government bowed to pressure and revoked Rio Tinto's lithium exploration license on Thursday, environmentalists have won and are now demanding a moratorium on lithium mining ahead of expected elections in April to ensure that the decision is not overturned later.
Serbian Minister of Mines and Energy Zorana Mihajlovic said late Friday that Belgrade had acted to meet demands from various green groups to stop the Jadar lithium project, but accused them of injecting political factors into environmental issues.
"the government has made it clear that it wants to have a dialogue," Mikhilovich told reporters. (and) try to use ecology for political purposes, showing that they (green groups) do not care about people's lives and industrial development. "
The country's populist ruling coalition, led by the Serbian Progressive Party (SNS), has come under fire for supporting lithium and copper mining, undermining the majority lead won in the 2020 vote.
The decision is a major setback for Rio Tinto, which hopes the project will help make it one of the world's top 10 lithium producers. China is the world's largest consumer and processor of metals, and European countries have been trying to increase their production.
Rio Tinto said last month it would buy a second lithium asset in Argentina for $825 million to build its battery materials business.
The European Battery Union, a network of electric vehicle supply chains formed by Brussels, said the Jadar project "constitutes a significant share of potential domestic supply in Europe". Serbia is not a member of the European Union, but hopes to join the European Union in the next few years.
"this will help support the development of Serbia's emerging industrial battery-related ecosystem and make a significant contribution to Serbia's annual GDP," the alliance said in a statement.
Rio Tinto's Australian shares closed down 4.2% on Friday. Rio Tinto's shares closed down 2.2% in London.
In recent months, thousands of Serbs have blocked roads to protest government support for the project, demanding that Rio Tinto leave the country and forcing local municipalities to cancel plans to allocate land for the facility.
Ljiljana Bralovic, one of the protest leaders, said more protests will be held on Saturday in the town of Loznita in western Serbia, where the mine will be built.
"not only do we want Rio to withdraw from Serbia, we also want a permanent ban on the mining of lithium and borates." Brahlovich said.
Another protest leader, Alexander Jovanovic Kuta (Aleksandar Jovanovic Cuta), said green groups would block any attempt by future governments to negotiate a new deal with Rio Tinto after the election.
"anyone who tries to do this is crazy and the whole of Serbia will take to the streets." He said.
On Thursday, Rio Tinto said it was "extremely concerned" about Serbia's decision and was reviewing its legal basis.
The Australian government expressed regret over Serbia's decision.
Relations between Belgrade and Canberra deteriorated on Sunday after Serbian tennis star Novak Djokovic was deported from Australia because of covid-19 entry rules.
In its July project fact sheet, the company said Rio Tinto had spent $450 million on pre-feasibility, feasibility and other studies for Jadar to understand the nature of the deposit.
Saul Kavonic, an analyst at Credit Suisse, said of the Jadar mine: "in the past six months, opposition to it has really increased."
"We have stressed for some time that if the government cancels it, there will be a risk of about $2 per share."
At full capacity, the Jadar mine is expected to produce 58000 tons of refined battery-grade lithium carbonate a year, making it the largest lithium mine in Europe.
Experts say the global lithium shortage is expected to last for at least three years, but will worsen with the cancellation of the Jadar project.
"We are now at a time when the supply of lithium will determine the speed of the promotion of electric vehicles," Kavonic said.
In recent years, strong global demand for metals has far outpaced supply growth, boosting lithium prices.
Lithium futures, which began trading on the Chicago Mercantile Exchange in May last year, rose 171 per cent to an all-time high of $38 per kilogram on Thursday, according to Refinitiv.
