SIM Report: Local opposition to major lithium mine carries wider implications for mining industry in Serbia
President Aleksandar Vučić said the government may grant a local plebiscite over the Jadar lithium mine, developed by London-headquartered mining firm Rio Tinto, near the western city of Loznica. If approved, the mine would be the largest such project in the country and a key export generator.
There is strong local community opposition to the project, driven by concerns that it could threaten an archaeological area and several natural monuments. Community advocacy group Ne Damo Jadar said the lithium mine could lead to people moving out of the area, while also damaging forests and local water supplies. For example, the extraction of lithium may lead to arsenic being deposited in the tailings, rendering the surrounding area unfit for agriculture. Local activists say Rio Tinto acquired land from 36 families and has said properties belonging to other home-owners in the area will be expropriated. Vučić previously defended the project on the grounds that an unnamed European car manufacturer could product 450,000 electric vehicles per year using batteries from lithium extracted in Serbia. This could increase Serbia’s GDP by 22.2 per cent compared to 2020 figures. Rio Tinto said it would invest over USD100 million in environmental protection.
The Jadar greenfield lithium project is one of the largest under development and has the potential to produce around 55,000 tonnes of lithium carbonate that can be used for electric batteries; lithium is a central element that will be crucial in the large-scale production of electric vehicles. Once completed, the mine is also expected to produce 160,000 mt/year of boric acid (B2O3 units) and 255,000 mt/year of sodium sulfate. A feasibility study is expected to be completed by the end 2021, with construction taking up to four years if the project is approved.
A memorandum signed in July 2017 between Serbian Prime Minister Ana Brnabić and Rio Tinto confirmed the production of lithium due to begin in 2023. Opponents say the project was granted illegal administrative support because the government facilitated permits by classifying the project being ‘in the public’s interest’. Over 100,000 signed a petition calling for a ban on the mining project and an associated metal processing complex in Jadar.
Mining in sensitive locations has reignited concerns about the adverse impact extraction projects can have on local communities and places of historical and cultural significance. Multiple protests have taken place both at home and externally against the project. In October 2020, a protest broke out in the Serbian city of Loznica, with local residents demanding an urgent suspension of all activities relating to the construction of the mine. Protests over the mine were also held outside Rio Tinto’s London offices in April to coincide with the company’s annual general meeting.
Foreign investors should monitor developments relating to the lithium mine and factor risk-influencing scenarios into operational planning. If the government decides to grant a referendum on the issue, this may also set a precedent for other mining and energy projects facing local opposition in the country. More broadly, changing political attitudes towards the project highlight the importance of careful stakeholder management when planning large-scale projects. Without sufficient local buy-in, companies will face both local and national resistance to planned investments. Governments – sensitive to public views on divisive projects – will seek to appease voters by reconsidering such projects or delegating the decision to local voters.