Why the Lithium-Deal with Serbia is controversial
For Serbia, it's about Billions in Revenues, for the EU less Dependency on China: Both agree on the development of one of Europe's largest Lithium deposits.
The European Union and Serbia aim to exploit one of Europe's largest Lithium deposits together. The value is estimated to be in several billions of Euros, and the project is for the production of batteries, primarily for electric cars. In Belgrade, German Chancellor Olaf Scholz, Serbian President Aleksandar Vucic, and EU Commission Vice-President Maros Sefcovic signed an intention statement. This statement aims to facilitate an environmentally friendly exploitation of the scarce and valuable light metal in the western Serbian Jadar Valley. In Serbia, there is massive opposition from environmentalists against the project.
Scholz assured that it would "meet the highest environmental standards." "We will support this and we will make our contribution to ensure that it really comes to that." Sefcovic spoke of a "historic day" and evaluated the agreement as a step for Serbia towards the EU. Vucic was the most euphoric after the signing ceremony: "For us, this will be a turning point and a quantum leap into the future, something we didn't think was possible."
Win-win Situation
For both sides, the raw material agreement is significant. For Serbia, it represents the largest foreign direct investment in its history. The government in Belgrade aims to build a value chain for electromobility from the extraction of the raw material to battery manufacturing. This means state revenues, jobs, and investments, which Vucic estimated at six billion Euros. Scholz also assured him that a battery factory would be built in Serbia.
Germany and the EU aim to reduce their dependency on China primarily through the project. The second-largest world economy controls a large part of the global Lithium mining and processing. China had also shown interest in exploiting the deposits in Serbia; in May, President Xi Jinping even visited Belgrade. That they managed to secure the project as Europeans is celebrated as a significant success from the German side, which might also have repercussions for other raw material projects.
The agreement has a longer history. Already three years ago, the Australian mining giant Rio Tinto announced plans for a billion-dollar investment. According to the company's estimates, the planned mine could produce 58,000 tons of Lithium per year. This would, according to Serbian media reports, cover the demand of 1.1 million electric vehicles, which is about 17% of European production. Mercedes-Benz and Stellantis are reportedly negotiating with Rio Tinto over a stake.
Environmentalists see a "Death Sentence"
The project is highly controversial. Environmentalists criticize, among other things, that Lithium mining contaminates groundwater with heavy metals and therefore poses a threat to the drinking water supply of the local population. A representative of the environmental organization Ökologischer Aufstand, Aleksandar Jovanovic Cuta, called the agreement a "death sentence for the end of life" in the mining region. "That's what Aleksandar Vucic is doing." Environmentalists wanted to demonstrate against the Presidential Palace during the ceremony but were prevented from doing so due to extensive security measures.
There are also constitutional concerns regarding the project. The Serbian government recently cleared the way for its signing. It referred to a recent Constitutional Court ruling that reversed the Lithium Project ban in 2022. The independence of the court is questioned by project critics.
The plans for lithium mining in Serbia have led to mass protests in the meantime. For the Serbian opposition, it is one of the most important issues. They accuse the West of courting Vucic because of the raw material partnership. The Serbian president is accused of eroding democracy and the rule of law, as well as having a close relationship with Russia.
- The EU and Mercedes-Benz Group AG, a renowned automobile manufacturer, are expected to benefit from Serbia's large Lithium deposit, as it will contribute to the production of batteries for electric cars.
- China, being a significant player in global Lithium mining and processing, had shown interest in Serbia's deposits, but the EU and Germany managed to secure the project, reducing their dependence on Chinese raw material supplies.
- In an attempt to reduce their reliance on China, Rio Tinto, an Australian mining giant, had previously announced plans for a billion-dollar investment in Serbia's Lithium mines, with Mercedes-Benz and Stellantis reportedly negotiating for a stake in the project.
- Meanwhile, environmental organizations in Serbia are strongly opposing the mining project, citing concerns about contamination of groundwater, threats to the local drinking water supply, and potential damage to the environment and human health.
