Autohr: Mikhail Korostikov
In June 2024, Serbian President Aleksandar Vučić announced that Serbia would resume its lithium exploitation project “Jadar” in Western Serbia, spearheaded by Anglo-Australian multinational Rio Tinto. The EU backed this project by claiming that it is willing to guarantee that the project will be implemented in accordance with sustainability principles. Given that the project has been put on hold since late 2021 after massive environmental protests, the announcement is already generating political tensions in the country.
The Jadar project is poised to become one of Europe’s largest lithium mines, crucial for the production of lithium-ion batteries. However, the project has been met with significant opposition from environmental activists and local communities, particularly regarding the potential contamination of local water resources from mining chemicals, threats to biodiversity due to habitat disruption, soil degradation impacting agriculture, and increased air pollution from dust and emissions. Many in Serbia fear that the project could cause irreversible damage to the region’s ecosystem.
Despite these concerns, the Serbian government and Rio Tinto are pushing forward, arguing that the project is vital for Serbia’s economic future and for Europe’s green energy transition. The situation remains tense, with activists threatening further protests and potential disruptions as the project progresses
For those protesting the “Jadar” project the project is not just about environment but also about the state of democracy and rule of law in the country that has been declining under the leadership of President Vučić and his Serbian Progressive Party (SNS). The proposed project has its pros and cons. The pros will largely be determined by the EU’s ability to follow through on its commitment to the sustainability of the project, and the cons will come to the fore in case the project gets implemented in a way that goes against these commitments. The EU has emphasized the importance of thorough environmental impact assessments and the implementation of mitigation strategies to protect water resources, biodiversity, and local communities. Additionally, the EU has indicated its readiness to provide technical assistance and monitoring to ensure compliance with these environmental safeguards, aiming to balance economic development with environmental protection.
In terms of pros, it is not yet certain that the lithium partnership can help Serbia on its path to EU membership, given the current messy state of European politics. Still, Serbia’s ties with the EU can be strengthened as a result of the lithium partnership as Serbia tries to extract long-term capital investment, a better regulatory regime, a stronger political link with the EU and price stability that can help Belgrade develop a long-term development agenda.
As the EU lithium consumption is set to grow 18-fold by 2030, the EU tapping into Serbian lithium deposits would help the EU create a separate value chain that is less exposed to pressures from China. Simultaneously, Serbia’s geopolitical clout would get a boost because the EU would also be more dependent on Serbia for the supply of critical material.
Moreover, EU companies treat workers and local communities in partner countries with greater respect than Chinese investors, and that puts the EU in a relatively good position to help ensure that the project is implemented in accordance with sustainability standards. This can be done by providing EU inspectors who would ensure that lithium mining follows the same standards environmental and labour standards as the ones in EU member states.
The EU would also need to provide long-term contracts for Serbian lithium that stipulate fixed prices given that the lithium price is volatile, with price fluctuations going up to 500%, given the booming market. The long-term contracts help Serbia develop long-term development strategies and incentives to the EU for upholding environmental standards.
Thirdly, the EU-Serbia development plan for the entire value chain needs to involve the assembly of an electric car with a lithium battery. This way, Serbian society and economy would avoid the “resource curse”, a structural condition where the abundance of certain resources eliminates the incentive to generate productive economic activities and create stable political institutions. Instead, it breeds corruption and incompetent political elites’ hold on power while degrading precious resources.
Among the cons of the proposed project is also the fact that two relevant stakeholders have a track record that does not generate confidence among Serbian citizens who oppose the project. These are the Rio Tinto and Serbian President Vučić. Rio Tinto’s global mining operations have been marred with environmental controversies. In April 2024, it was reported that the Norwegian sovereign wealth fund is considering pulling its capital from Rio Tinto in protest over how the company upheld environmental standards in the Brazilian Amazon. Vučić’s government also has a track record of ignoring environmental degradation and public health risks for the sake of easy cash inflow and domestic political promotion, as exemplified by disregarding the damaging environmental impact of the Chinese investment.
The problem is also the fact that the EU’s capacity to fully implement its sustainability guarantees is mixed. The EU Critical Raw Materials Act, signed in April 2024, does not describe mechanisms for verifying enforcement of environmental norms. It only invokes “compliance with applicable national law” while invoking sustainability guidelines from numerous international bodies like the Organisation for Economic Co-operation and Development (OECD), International Labour Organisation (ILO) and International Financial Corporation (IFC). This helps explain why, despite the EU regulatory power, the standard violations can still occur in countries with weak rule of law institutions like Zambia or Brazil.
Finally, the ultimate risk is in the scenario that the EU fails to follow its commitments to sustainability standards and labour rights and opens up production facilities attached to lithium mining. In this case, “the resource curse” would really be Serbian fate, resulting in environmental degradation, corruption and illiberal political institutions.
Ultimately, whether the pros of the project outweigh the cons will largely depend on the EU and whether it will forcefully and principally apply its own commitments regarding environmental standards. Otherwise, the project will generate environmental fallout at the expense of the local community, help entrench the incumbent Serbian elite in power and result in the decline of already fraying EU prestige in Serbia.
*Mikhail Korostikov is a visiting fellow at the Belgrade Centre for Security Policy (BCSP)
