By bne IntelliNews
Serbia is firmly in the European Union’s sights as a potential supplier of lithium — one of the critical raw materials (CRMs) essential for the green transition — after President Aleksandar Vucic signalled that Rio Tinto’s stalled Jadar project will most likely go ahead.
This development comes as the EU intensifies its efforts to secure critical raw materials (CRMs) essential for the green transition. However, the project faces strong opposition from environmental groups within Serbia.
The European Union's Critical Raw Materials Act (CRMA), designed to ensure a steady supply of minerals crucial for green and digital technologies and reduce dependency on China, recently entered into force. The act aims to establish Europe as a manufacturing hub for electric vehicles, wind turbines, and other green technologies while minimising reliance on Chinese imports for key minerals.
One of the countries being eyed as a source for such materials is Serbia. In September 2023, Serbia’s government signed a letter of intent with the European Commission on a strategic partnership in batteries and critical raw materials, including lithium.
Johanna Bernsel, spokeswoman for the European Commission for the internal market, spoke of the strategic importance of Serbia in a statement to European Western Balkans (EWB). 'The EU remains committed to entering into a strategic partnership with Serbia, which contributes to the creation of a sustainable and competitive e-mobility ecosystem and the establishment of a framework for ensuring a safe and sustainable supply of critical raw materials to the European Union,' Bernsel said. Previously, a letter of intent was signed in September last year by Vucic and European Commission Vice-President Maros Sefcovic.
If realised, the Jadar project, set to become Europe's largest lithium mine, could start operations as early as 2028, with an annual production capacity of 58,000 tonnes of lithium, sufficient for 17% of Europe's electric vehicle production. 'If we fulfil everything, [the mine] could be opened in 2028,' Vucic told the Financial Times on June 16.
The European Union's efforts to secure access to CRMs were stepped up in light of the supply chain vulnerabilities exposed by the COVID-19 pandemic and Russia's invasion of Ukraine. The CRMA sets ambitious targets for 2030, including mining 10%, recycling 25%, and processing 40% of the EU's annual needs, with no more than 65% sourced from any single third country.
'In the 2020s, we are becoming increasingly reliant on a new set of critical raw materials, including rare-earth elements and metals such as lithium, gallium, and germanium. These commodities are vital to the green and digital transitions, which in turn will determine our future on this planet,' wrote Werner Hoyer, President of the European Investment Bank, in September 2023.
Controversial project
Serbia's move to greenlight the Jadar project follows Rio Tinto's release of a preliminary Environmental Impact Assessment (EIA) on June 13, which reportedly demonstrates the project's environmental safety. This has opened the way for the government in Belgrade to support the project after licenses were revoked in January 2022 amid widespread environmental protests.
Despite draft studies indicating the project's safety, it remains controversial. Environmentalists and local residents warn of increased pollution in a country already facing severe environmental issues.
Serbia’s opposition has now announced a united front to fight against the reactivation of the project, with protests planned later this month.
However, the project has the potential to meet 90% of Europe's current lithium needs and it will bring economic benefits to Serbia, including generating significant revenue and creating hundreds of jobs. While the new government — Vucic’s Serbian Progressive Party (SNS) was elected at the end of last year — is treading carefully, officials have repeatedly talked of the need to press ahead with developing the country’s lithium resources.
Global search
The strategic partnership with Serbia would make it the 14th country to enter such an agreement with the EU in the critical raw materials sector, joining nations from Argentina to Uzbekistan.
The demand for CRMs like lithium, copper and rare earth metals such as neodymium is soaring, and they often lack viable substitutes. However, their supply is not assured. Unlike oil, CRM deposits are highly concentrated in specific countries, and developing new mining operations is a slow process. For instance, over half of the world's lithium reserves are located in Chile and Australia, while China controls about a third of the rare earth deposits.
Furthermore, while the extraction of CRMs is dominated by a few countries and corporations, the processing predominantly occurs in China, with most extracted minerals sent there for refinement. As demand for CRMs outpaces extraction, tensions are rising between resource-rich and resource-poor nations over access to these essential materials.
There has been a shift towards resource nationalism in some countries that want to ensure they become manufacturing hubs rather than simply producers of raw materials.
For example, Indonesia banned nickel exports in 2021 to attract foreign investment in local battery manufacturing and is now considering further mineral export bans to boost industrialisation. Similarly, Zimbabwe, home to Africa’s biggest lithium deposits, banned lithium exports, with Namibia and Tanzania following suit. Mexico has started nationalising its lithium mining industry.
Meanwhile, amid growing rivalry between China and Western nations, resource-rich Canada and Australia have become more selective about foreign investors, in particular when it comes to Chinese acquisitions.
Central Asia
Serbia is unusual in being open of only two European nations (the other is Ukraine) with which the EU is currently working towards a strategic partnership. Brussels has primarily looked to regions such as Central Asia, Africa and Latin America for partners in the CRM sphere.
In April, the EU signed an MoU with Uzbekistan that Brussels said could pave the way to securing the bloc CRMs through a strategic partnership. Uzbekistan, with significant reserves of CRMs like copper, molybdenum and gold wants to expand its CRM processing for domestic and international industries.
'This agreement with resource-rich Uzbekistan will help the EU to secure much-needed access to critical raw materials. It is part of our wider global outreach to work with partners on securing materials for the future,” European Trade Commissioner Valdis Dombrovskis said at the time.
Key areas of cooperation under the strategic partnership include integrating sustainable CRM value chains, enhancing the resilience of supply chains, mobilising funding for projects, promoting sustainable production and sourcing, fostering research and innovation and building capacity.
Neighbouring Kazakhstan is another resource-rich nation that could become a supplier of lithium to the EU.
As reported by bne IntelliNews, it is already emerging as a significant potential supplier of high-quality lithium, even though firm investment commitments are still few. Kazakhstan's substantial lithium reserves are estimated at 75,600 tonnes by the National Geological Service.
Maros Sefcovic, executive vice-president of the European Commission for the European Green Deal, highlighted Kazakhstan's rich natural resources, including over 20 critical raw materials like tungsten, lithium, and rare earth elements, at the EU-Kazakhstan Business Forum in November.
Shortly afterwards, the European Commission and the European Bank for Reconstruction and Development (EBRD) announced a €400,000 grant for lithium exploration in the Aral Sea and sustainable tungsten processing projects, in collaboration with Kazakhstan’s state-run mining company, Tau-Ken Samruk.
Elsewhere in Central Asia, Tajikistan and Kyrgyzstan, the poorest countries in the region, also hold valuable CRMs. Tajikistan claims to have deposits of all 34 CRMs sought by the EU, with notable reserves of lithium and antimony.
Similarly, Kyrgyzstan has significant deposits of gold, antimony, and rare earth elements. However, foreign companies face operational challenges, and the country has tightened state control over mineral exploration, as outlined by bne IntelliNews columnist Bruce Pannier in a recent article.
African resources
Africa holds a significant portion of the world's mineral reserves, crucial for the clean energy transition. The continent boasts 85% of global manganese, 80% of platinum and chromium, 47% of cobalt, 21% of graphite, and 6% of copper. Countries like Mali, Guinea, Gabon, the DRC, Namibia, South Africa, Zimbabwe, Mozambique and Zambia have vast reserves of these critical minerals.
Despite this wealth, Africa, like some of the Central Asian republics, faces challenges in fully exploiting these resources. Many minerals are still exported unprocessed, benefiting foreign countries more than local economies. The DRC, for example, still ships most of its cobalt to China for refining. Accordingly, some African nations have begun to ban the export of unprocessed minerals in the hope of developing domestic value-added industries.
Latin America is another region whose natural resources, particularly lithium, are increasingly in demand. The continent is home to the so-called Lithium Triangle, positioned at the borders of Argentina, Bolivia and Chile.
In June 2023, European Commission President Ursula von der Leyen and President of Argentina Alberto Fernández signed an MoU establishing a partnership on sustainable raw materials value chains. This was followed a month later by the signing of a similar MoU between the EU and Chile, establishing a partnership on sustainable raw materials value chains.
Brussels is now hoping to secure supplies from Serbia, a country that is not only located on the borders of the EU, but also a candidate country to join the bloc. However, this will hinge on the government in Belgrade managing to convince the Serbian population of the benefits of the project and ensuring that it does not lead to substantial environmental damage.
