bilaterals.org logo
bilaterals.org logo
   

Serbia’s lithium gamble: Reviving Rio Tinto’s mine amidst protests and economic promises

Protest in front of RTS building in Belgrade (photo by Mašina / CC-BY-SA 3.0)

TNI | 4 September 2024

Serbia’s lithium gamble: Reviving Rio Tinto’s mine amidst protests and economic promises

by Lucía Bárcena

On 16 July 2024, Serbia restored mining giant Rio Tinto’s licence to extract lithium near the town of Loznica in the Jadar Valley in the west of the country, triggering street protests in the capital Belgrade and other urban centres. The mining licence had previously been revoked in 2022, after thousands of demonstrators had similarly taken to the streets, arguing that creating a massive lithium mine in the area could cause egregious and permanent damage to the environment, and contaminate the region’s water supplies. The question arises, why would the Serbian government risk, once more, the ire of its citizens?

The Balkan nation has extensive deposits of lithium, which is an important component of batteries for electric vehicles, and the government sees the mine as a way to boost the country’s economy. According to sources, "the Jadar project was designed as the largest lithium mine in Europe, which would potentially meet up to 90% of the lithium demand in Europe." Some projections of annual GDP growth propelled by the mine go up to €12bn, which would be a critical boost to an economy where GDP per capita was less than 50 per cent of the EU average in 2023. The EU, itself in need of lithium and other “green transition” materials, would stand to benefit massively from the success of the mining project. It has, in fact, signed an MoU with Serbia, to ensure its interests.

The EU’s minerals and materials needs

In 2019, the EU launched its Green Deal, aiming to establish a leading green technology industry through substantial fiscal and financial investments, with the goal of achieving net-zero emissions by 2050. Central to this initiative is the Green Deal Industrial Plan (GDIP), introduced by the European Commission President in 2023, and supported by two key legislative components: the Net Zero Industry Act (NZIA), and the Critical Raw Materials Act (CRMA). Both were adopted in 2024, and sought to secure the EU’s access to critical raw materials like copper and lithium, which are essential for green technologies. The CRMA addresses the EU’s significant challenge of import dependency on these materials, critical for building a green industrial base. To do so, the CRMA mandates the EU to (i) build comprehensive strategic partnerships with supplier countries, backed up by concrete roadmaps for increasing and diversifying supplies; (ii) secure new trade and investment treaties with resource rich countries that are key trading partners for the EU, and (iii) mobilise public money to promote public-private partnerships (i.e. through the Global Gateway).
Strategic Partnership on raw materials between Serbia and the EU

The EU and Serbia signed a Memorandum of Understanding on 19 of July 2024 as part of the EU’s strategy to secure access to materials and minerals with strategic relevance from countries outside the EU. The MoU on “Strategic Partnership on sustainable raw materials, battery value chains and electric vehicles (EVs)” is a non-binding agreement where partners express their mutual interest to work together to secure a “sustainable supply of raw materials”. The MoU was signed by the Executive Vice-President for the European Green Deal, Interinstitutional Relations and Foresight of the European Commission, Maroš Šefčovič and the Minister of Mining and Energy of the Republic of Serbia, Dubravka Đedovič Handanović. Similar to other MoUs, this was signed by a non-elected official in the EU and in a non-official event, in this case the signing ceremony took place during the High-Level Summit on critical raw materials in Belgrade.

So far, the EU has signed 13 Strategic Partnerships on raw materials, with all of them presented as mutually beneficial for the signing parties. However, these joint partnerships are mainly about “facilitating business opportunities” to EU investors in the partner countries by ensuring an enabling environment for their investments. According to the text, the partnership should facilitate the alignment of policies and ensure that regulations do not create barriers to the supply of raw materials or EVs to the EU and help identify financial and investment de-risking instruments.

Trade and investment agreements

In some cases, MoUs can be a backdoor mechanism for signing new Free Trade Agreements or building upon existing ones. As the European Commissioner for the Internal Market, Thierry Breton, said, these partnerships are complementary to the EU´s FTAs: ‘Provisions in trade agreements are legally binding, while partnerships offer a political framework for concrete bilateral cooperation in the specific field of raw materials, to turn economic opportunities into mutually beneficial realities.’1

Serbia currently has 55 Bilateral Investment Agreements signed including with most EU countries. Investment agreements give access to recourse to investment arbitration, and result Serbia has 15 ISDS cases as a result. In 2021, Rio Tinto filed a notice of dispute related to the government announcement to cancel the Lithium project in the Jadar Valley under the UK-Serbia bilateral investment agreement. According to IA Reporter it remains unclear whether it has been formally lodged under the BIT, what is now clear is that the government has now given the green light to reopen the Lithium mine.2

Strategic Partnerships and trade agreements are the confirmation that the sides will guarantee an enabling environment for foreign investors in the “productions and trade of EVs, including raw materials and batteries”. This means to ensure open and free markets “absent of distortions”, such as export bans on raw materials, no dual pricing and avoiding any type of monopolistic competition or the nationalization of materials and minerals.

Public-private partnerships

The Global Gateway, announced in 2021, is a public-private initiative to fund investment projects in third countries in some new form of international cooperation, completely guided by economic interests of the EU. To raise the necessary funds, ‘team Europe’ is counting strongly on private investment, which it is trying to attract with tender and grant opportunities, combined with loans from development finance institutions (DFIs). So far, the only Global Gateway project announced is the Trans-Balkan Electricity Corridor. The MoU mentions other Investment Platforms such as Invest EU, the Western Balkans Investment Framework and the European Battery Alliance.

Human rights and environmental standards

The MoU mentions the need to minimize environmental impacts and ensure benefits for local communities by “implementing best available techniques” and only mentions the application of guidelines and best practices such as the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, which is a self-regulated and voluntary guideline for enterprises to follow. It mentions “early consultation” on new legislative and non-regulatory initiatives proposed within the framework of the Partnership and exchange of information on best practices. There is no binding instrument that guarantees the obligations of transnational corporations and investors to respect Human Rights. On the contrary, the huge increase in demand also means a rush into opening new mining projects for the purpose of the energy transition. This is particularly dangerous considering that mining is already a very conflict-prone sector, a tendency likely to increase with an intensified quest for raw materials to keep up in the international race towards a ‘cleantech’ capitalism.

Monitoring and implementation

In six months’ time the signatories should develop a Strategic Partnership Roadmap to identify clear actions to implement the MoU. This is followed by a working group composed of senior officials that will meet every year to review the next steps. According to the text of the MoU, the concrete activities will be mainly workshops, technical assistance, research on technology and best practices and the facilitation of contacts/participation for new investments opportunities. There is no independent body established to monitor the activities developed under their scope.

Conclusion

That this MoU was signed despite the clear and vigorous resistance of Serbian citizens makes it imperative to ask whose interests it serves. Some activists, like TNI associate Aleksandar Matković, have argued that citizens have not seen the benefits of increased investments in mining, and that the EU is turning Serbia into a mining colony for the EU; a form of green colonialism. They have instead called for more investment in public transport and infrastructure rather than the increased use of lithium for electric vehicle batteries. It is yet to be seen which vision of Serbia’s future will prevail, but for now, the will of the Serbian people is loud and clear: “There will be no mines”.


 source: TNI