Lithium: Everything you need to know about the EU-Serbia deal that has the Serbs angry

This article was originally published in English

Environmental groups in Serbia have called for what they hope will be a mass demonstration in Belgrade tomorrow (August 10) against the plans to open Europe's largest lithium mine in the fertile Jadar Valley in the west of the country, while China – the world's third largest producer – is also looking to establish itself in the region.

The Serbian mining project has been a source of growing unease since Anglo-Australian mining conglomerate Rio Tinto discovered deposits of a new mineral it called Jadarite two decades ago, but tensions reached a fever pitch in January 2022 when President Aleksandar Vučić's government withdrew its approval of the mining project's land use plan.

This decision followed months of protests sparked by fears of the drastic environmental impact of the planned operation, which the firm says could produce some 58,000 tonnes of lithium carbonate (the form in which it is widely marketed, equivalent to about 11,000 tonnes of pure lithium metal) annually.

According to available estimates, a typical 60 kWh electric car battery requires about 50 kg of salt (containing 9.4 kg of pure lithium), so this deposit is sufficient for more than a million such vehicles.

With EVs accounting for a growing share of annual car sales (14.6% of the 10.5 million units sold last year in Europe, according to trade association ACEA), the market value of lithium carbonate is expected to rise, although prices appear to have stabilised for now at around $13 per kilo, after rising to five times that price in 2022.

Analysts at BMI – part of the Fitch group, better known for its credit ratings – had forecast a more modest but nonetheless significant increase in late June, reaching more than $15 this year and then $20 in 2025, with increased production largely meeting demand.

But the global market price is not the only reason Europe wants to extract the ore closer to home: it wants to avoid dependence on large external suppliers at a time of growing geopolitical tensions – a fact most clearly reflected in the national production and recycling targets of the recent Critical Raw Materials (CRM) Act.

Australia is by far the world's largest supplier, producing 88,000 tonnes of lithium, almost double the output of second-placed Chile last year (the EU entered into a strategic partnership with the Antipodean mining giant shortly before Serbia).

China produced about 33,000 tonnes last year, but that figure does not reflect its importance in global markets.

Tianqi, a Chinese company that is among the world’s top four lithium miners, is heavily invested in production in Australia. In an interview with the South China Morning Post last month, chief executive Frank Ha Chun Shing said the company was in talks with potential European partners – including in an unnamed EU country – about getting into battery production.

Chinese company Eve Power began hiring in March for its new €1 billion battery plant in eastern Hungary, while Chinese carmaker BYD announced its first European electric car production plant in the same country late last year (more recently, it announced it would open a similar facility in Turkey).

With the EU's recent tariffs on Chinese electric vehicles perhaps a harbinger of things to come, Chinese companies have every incentive to move their production closer to the European market.

Lithium production plans within the EU are currently on hold, with the ambitions of the only significant producer, Portugal (380 tonnes last year), to significantly increase its output also hampered by public opposition and, more recently, by of theconfusing accusationsof corruption.

Which brings us back to Serbia, whose reserves are estimated by the U.S. Geological Survey at 1.2 million tons, compared with Portugal’s at 270,000. (Germany has 3.8 million tons, according to the U.S. government agency, and the Czech Republic has 1.3 million, raising interesting questions about assumptions about public acceptance of lithium mining too close to home.)

On July 19, the EU signed a memorandum of understanding with Vučić at a CRM summit in Belgrade, attended by the chancellor of Europe's automotive superpower Germany. Three days earlier, the Serbian government had reinstated Rio Tinto's license, unblocking the mining project.

Protesters had been mobilizing even before the Supreme Court ruling on July 11, which served as a pretext for the government’s U-turn and which opponents of the mining project clearly took for granted. The “EU-Serbia Strategic Partnership on Sustainable Raw Materials, Battery Value Chains and Electric Vehicles” has sparked a new round of protests that are expected to culminate in what organizers hope will be a show of force this weekend.