Serbia Signals Dedication to Lithium Mining with EU MoU?

The five key work streams of the partnership are:

1. Developing value chains for raw materials, batteries and electric vehicles, including:
   1. facilitating close cooperation between EU and Serbian industry stakeholders through networking, joint project development and promotion and facilitation of trade and investment links;
   2. modernising extraction and refining processes;
   3. advancing best practices for resource classification using international standards; and
   4. developing a mutually beneficial pipeline of projects, focusing on the electric vehicle industrial ecosystem.
2. Cooperating on research and innovation in raw materials, batteries and electric vehicles, including strengthening the participation of Serbian research and innovation (“R&I”) organisation in the EU R&I programmes, knowledge sharing and facilitating industrial uptake of green and digital innovations developed as part of the partnership.
3. Applying high sustainability standards in the raw materials, batteries and electric vehicle sectors, including via the application of guidelines and best practices on ESG standards, including the EU principles on sustainable raw materials, cooperation to improve legal and regulatory framework, early consultation on new legal initiatives relating to sustainability and the regular exchange of information regarding the application of existing international standards for due diligence and reporting on sustainability.
4. Cooperating in mobilising financial and investment instruments for projects, with investors and financing organisations that follow EU sustainable financing rules. The parties will increase transparency and stakeholder involvement in financing, facilitate financing for research as well as projects and pair up sustainable and innovative projects in the sectors with European and Serbian investors.
5. Developing necessary skills for high-quality jobs in the raw materials, battery and electric vehicles sectors, including for green and digital skills. This will include the participation of Serbian organisations in European Battery and upcoming Raw Materials Academies, including possible Serbian contribution with dedicated programmes and internships.

Entering into the partnership has caused a series of protests across Serbia, building on the discontent in the population after the Serbian Constitutional Court reversed a 2022 government decision to revoke planning permission for the development of a lithium mine by Rio Tinto. The government has already indicated that it will implement the decision of the Constitutional Court.² Serbia had initially signed an MoU with Rio Tinto in 2017, for the development of a lithium mine in Jadar,³ with Rio Tinto disclosing significant reserves in late 2020.⁴ However, in January 2022, following significant protests by environmental groups, the government of Serbia revoked Rio Tinto’s licences and put a halt on all development for the $2.4 billion project.⁵ Rio Tinto has indicated its continued dedication to the Jadar Project which, if developed, could cover 90 percent of Europe’s current lithium needs.⁶ The EU-Serbia MoU may bring in new parameters for the development of this project and will certainly impact any future mining projects for raw materials in Serbia. However, these parameters are likely to bring more regulatory certainty and, importantly, signal Serbia’s dedication to the exploration and extraction of raw minerals, which will be welcome news for investors considering mining projects in the jurisdiction. The partnership will also be welcome news for European manufacturers, with Serbia also indicating that it will give priority to EU-based car manufacturers for the purchase of lithium for car batteries.⁷

From an EU perspective, the MoU is another key step towards net zero, in view of the critical mineral resources in Serbia, including cobalt and nickel alongside the significant lithium reserves. The MoU follows from the Action Plan on Critical Raw Materials, which sets out the EU’s plan to engage in strategic partnerships with resource-rich countries, with similar agreements being singed with Canada and Ukraine in 2021, Kazakhstan and Namibia in 2022, Argentina, Chile, Zambia, the Democratic Republic of Congo and Greenland in 2023 and with Rwanda, Norway, Uzbekistan and Australia earlier this year. The standardisation of governance stands and practices by improved policy alignment, as is contemplated in a number of the proposed workstreams, will be welcome news for mining companies as they seek to develop projects across the EU and Serbia and consider the challenges of transport, processing and storage of raw minerals and the products they are used for. It remains to be seen how the partnership will move forward in the face of the public pressure against lithium mining and any projects with the potential for negative environmental impacts, but the plans for research and dedication to high sustainability regulations contemplated in the partnership may alleviate this public pressure as more information is provided in the coming months.

A roadmap of concrete actions under the MoU will be jointly developed over the next six months and all eyes will be on the cooperation with all stakeholders (including the Serbian population) to gauge the likelihood of success of future Lithium projects, and the extraction of other raw materials, in Serbia.

¹ European Commission, EU-RS Memorandum of Understanding (19 July 2024), https://single-market-economy.ec.europa.eu/document/6fe0e605-9299-45c3-b846-2efb85585251_en.

² ‘Serbian Government Restarts Rio Tinto’s Contentious Lithium Mine Project’ RFE/RL Balkan Service (July 16, 2024) <https://www.rferl.org/a/serbia-lithium-mine-approved-rio-tinto/33038776.html>

³ ‘Projekat Jadar – Kompanija Rio Tinto nastavlja ulaganje u rudnik litijuma kod Loznice’ Insajder (24 July 2024) <https://insajder.net/arhiva/vesti/projekat-jadar-kompanija-rio-tinto-nastavlja-ulaganje-u-rudnik-litijuma-kod-loznice>

⁴ Rio Tinto Press Release, ‘Rio Tinto declares maiden Ore Reserve at Jadar’ (11 Dec. 2020), https://www.riotinto.com/news/releases/2020/Rio-Tinto-declares-maiden-Ore-Reserve-at-Jadar

⁵ Ivana Sekularac, ‘Serbia revokes Rio Tinto lithium project licences amid protests’ Reuters (20 Jan. 2022) <https://www.reuters.com/business/retail-consumer/serbian-government-revokes-rio-tintos-licences-lithium-project-2022-01-20/>

⁶ ‘Rio Tinto welcomes Serbian court ruling on lithium project’ Reuters (11 July 2024) <https://www.reuters.com/markets/commodities/serbian-court-rules-govt-decision-revoke-lithium-project-permit-unconstitutional-2024-07-11/>

⁷ Ludwig Burger, ‘Serbia eyes lithium deals with Mercedes, Stellantis, VW, president says’ Reuters (11 July 2024) <https://www.reuters.com/markets/deals/serbia-eyes-lithium-deals-with-mercedes-stellantis-vw-president-says-2024-07-18/>