Last week saw another step-change in the global lithium market. The ultimate destination is more independence from China in the production of this critical mineral, the “white gold” that underpins the ever-evolving digital economy.
The deal happened with a stroke of a pen in Belgrade but will have far-reaching ramifications. Serbia and the European Union signed a new partnership deal on lithium following talks on critical raw minerals and metals. With the EU-Serbia memorandum of understanding on the production of sustainable raw materials, battery manufacturing and electric vehicles, Serbia became the 12th country to strike a deal on critical supply chains with the European single market.
Switching from one energy hegemon to another would be careless.
China currently services around 80 per cent of the bloc’s lithium-ion battery needs.
Wary of the experience with Russia and energy supplies, the EU is clearly worried about China’s grip on batteries as the change to renewable energy gathers pace. Switching from one energy hegemon to another would be careless. The MoU should be seen in the context of Europe’s increasing appetite for home-grown lithium, as it is expected that by 2050, the EU’s lithium needs will be 60 times higher than today.
Global demand for lithium mining expertise is likely to rise exponentially for Australian companies. For this reason, Canberra should pay more attention to the lithium developments in Southeast Europe. The European “Green Deal” project, worth more than $1 trillion over the next decade, presents Australian companies with significant business opportunities, including in the mining sector in Serbia. Resources giant Rio Tinto has had its share of troubles with Serbia in recent years but this month saw its licence to develop Europe’s biggest lithium mine reinstated.
Serbia’s President Aleksandar Vučić strongly backed the MoU, which saw German Chancellor Olaf Scholz land in Belgrade in a surprise visit. Scholz called the proposed lithium mine in Serbia’s western region “an important European project”, with his visit attracting significant media attention. Both Serbia and the EU want, with this project, to promote green and digital economic transitions, to mitigate the risks of possible disruptions of critical minerals supply chains, and to decarbonise the transport and energy sectors. The deal is backed by key industry giants such as Germany’s Mercedes-Benz and French-Italian Stellantis NV, as well as the European Bank for Reconstruction and Development – in which Australia is a shareholder. Serbia’s projected $2.4 billion lithium mine has the potential to become Europe’s biggest, with Rio Tinto expected to assume a major role in its development.
The agreement also aims to bring the EU and Serbia closer after decades of tensions.
Only two months before the Belgrade deal was signed, China’s President Xi Jinping visited nearby Hungary, eyeing a business potential for this country to become a key location for Chinese companies supplying lithium-ion batteries globally. Xi called through Belgrade too, with China and Serbia signing more than 20 agreements, including a deal between Serbian and Chinese broadcasters. Countering China’s soft power in the Balkans will be necessary to address anti-Western sentiment that is detrimental to business interests.
In contrast to proposed lithium mining operations in western Serbia, Chinese state-backed companies have been operating several mining projects in the country, which have expanded. Zijing Mining Group invested more than US$2.5 billion in its copper mining operations in eastern Serbia. But this did not attract the regular protests such as those witnessed in 2021-22 in western Serbia when anti-lithium mine activists temporarily took over nearby border crossings.
But jostling over influence is only one of the issues. The lithium project in Serbia has drawn the ire of European environmental groups. The prospect of mining impacts on the pristine wildlands and nearby waterways in an untapped area of western Serbia has led to complaints about the silencing of local communities protesting the development.
One of the most vocal anti-mining activists against Serbia’s proposed lithium project is Australian Logie-nominated actress Bojana Novakovic. As the face of anti-mining activism in Southeast Europe, Novakovic has been lobbying policymakers against the EU’s Critical Raw Materials Act. This legislation provides legal backing for Australian and other companies seeking funding for Central and Southeast European mining projects, including in Serbia, Austria and the Czech Republic.
As anti-lithium mine protests persist in Serbia, Belgrade and Brussels face increasing pressure to refine their public engagement strategies and assuage public concerns about the project’s viability. While the promise of more than 20,000 new jobs has been a key selling point, Serbia’s underdeveloped environmental regulations in the mining sector remain a significant obstacle.
