Serbian government blasts green groups for scuttling Rio lithium project
- Serbia revokes Rio’s lithium exploration licenses
- Environmental activists call for a ban on lithium mining in Serbia
- Share prices fall as cancellation seen as major setback
BELGRADE, Jan 21 (Reuters) – Serbian politicians on Friday criticized environmentalists for forcing them to scuttle Rio Tinto Plc (RIO.AX), (RIO.L) proposed a $2.4 billion lithium project, warning that the move could harm efforts to grow and diversify the Balkan country’s economy.
Environmentalists, however, after winning a victory after the government bowed to pressure and revoked Rio’s lithium exploration licenses on Thursday, are now demanding a moratorium on lithium mining ahead of elections due in April for s ensure that the decision is not reversed later.
Zorana Mihajlovic, Serbia’s mines and energy minister, said on Friday night that Belgrade had acted on demands from various green groups to stop Jadar’s lithium project, but accused them of injecting politics into environmental issues.
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“The government has shown that it wants dialogue… (and) the attempts to use ecology for political purposes show that they (the green groups) do not care about the lives of the people, nor about the industrial development,” Mihajlovic told reporters.
The country’s populist ruling coalition, led by the Serbian Progressive Party (SNS), has been criticized for backing lithium and copper mining, eroding the comfortable majority secured in a 2020 vote.
The move is a major setback for Rio, which had hoped the project would help make it one of the top 10 lithium producers in the world. China is the world’s largest consumer and processor of metal, and various European countries have been scrambling to increase their own production.
Last month, Rio said it would buy a second lithium asset for $825 million in Argentina as it seeks to expand its battery materials business.
The European Battery Alliance, a network of companies in the electric vehicle supply chain formed by Brussels, said the Jadar project “constitutes an important part of potential European domestic supply”. Serbia is not an EU member, although it hopes to join the bloc in the coming years.
“This would have helped support the growth of a nascent ecosystem related to industrial batteries in Serbia, contributing a substantial amount to Serbia’s annual GDP,” the alliance said in a statement.
Shares of Rio in Australia closed down 4.2% on Friday. While in London, shares of Rio ended down 2.2%.
Thousands of Serbs have blocked roads during protests against government support for the project in recent months, demanding that Rio leave the country and forcing the local municipality to drop a plan to allocate land for the facility.
More protests are planned for Saturday in the western Serbian town of Loznica, where the mine was to be built, said Ljiljana Bralovic, one of the protest leaders.
“We don’t just want to see Rio Tinto get out (from Serbia), we also want a permanent ban on lithium and borate mining,” Bralovic said.
Aleksandar Jovanovic Cuta, another leader of the protest, said green groups would block any future attempts by the government to negotiate a new deal with Rio Tinto after the election.
“Anyone who tries to do that is crazy, all of Serbia would spill out into the streets,” he said.
On Thursday, Rio said he was “extremely concerned” by Serbia’s decision and was examining the legal basis for it.
The Australian government said it regretted Serbia’s decision.
Relations between Belgrade and Canberra soured after Serbian tennis star Novak Djokovic was expelled from Australia on Sunday due to his COVID-19 entry rules.
Djokovic spoke out in favor of “clean air” in a December Instagram Story captioning a photo of the anti-landmine protests, which was posted by The Bridge, a digital sports platform.
Rio has already spent $450 million on pre-feasibility, feasibility and other studies at Jadar to understand the nature of the deposit, the company said in a July project fact sheet.
“The level of opposition to this has really increased over the past six months,” Credit Suisse analyst Saul Kavonic said of the Jadar mine.
“We’ve been pointing out for a while now that there would be about $2 a share at risk if the government canceled it.”
At full capacity, the Jadar mine was expected to produce 58,000 tonnes of refined battery-grade lithium carbonate per year, making it Europe’s largest lithium mine by production.
Experts have said the global lithium shortage is expected to last at least another three years, but with the cancellation of the Jadar project, the shortage will be exacerbated. Read more
“We are now at the point where lithium supply is going to set the pace for EV deployment,” Kavonic said.
Robust global demand for the metal, far outpacing supply growth, has driven lithium prices up in recent years.
Lithium futures, which began trading on the CME in May last year, jumped 171% to a record high of $38/kg on Thursday, according to data from Refinitiv.
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Reporting by Aleksandar Vasovic and Ivana Sekularac in Belgrade, Sonali Paul and Praveen Menon in Melbourne; additional reporting by Clara Denina in London and Florence Tan in Singapore; written by Praveen Menon and Ernest Scheyder; Editing by Kenneth Maxwell, Raju Gopalakrishnan and Paul Simao
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