The issue of environmental protection concerning the opening of a lithium mine and processing plant in the Jadar Valley is primarily a concern for Serbia and its citizens. All other stakeholders involved in this project are primarily interested in their own benefits—money, lithium, batteries, or reducing Europe’s dependence on China.
Economist Jeffrey Sachs has posited in an interview that economics is a tool of geopolitics. This perspective can also be applied to the “Jadar” project, where various major players have found their interests converging. In this case, however, the economic calculations are such that the economy cannot be viewed solely as a means to achieve geopolitical ends.
The signing of the “Memorandum of Understanding on Strategic Partnership between Serbia and the European Union in the field of sustainable raw materials, battery value chains, and electric vehicles” is a step closer to realizing these diverse interests.
Germany’s interest is in lithium, regardless of its origin, according to journalist and foreign policy commentator Boško Jakšić. The key is that it is not from China, as Europe, including Germany, is trying to reduce its dependence on China for lithium and diversify its sources of this raw material.
A “Shortcut” to Lithium
Currently, German battery manufacturers cannot do without China. Although lithium is mined in Brazil, Argentina, or Chile, it is ultimately processed in China and then sent back to German companies in a form suitable for battery production.
For this reason, German “AMG Lithium” plans to build the largest lithium processing refinery in Europe in Bitterfeld, in the east of the country. Deutsche Welle reports that lithium processing at this company begins in Brazil, with the mining of spodumene, a type of rock that contains lithium. This rock is crushed and processed in Brazil.
“In the first phase, we send spodumene concentrate by ship to China because there is currently no other refinery that can process this material,” said Stefan Schröder, chairman of the board of “AMG Lithium,” to DW.
He adds that the semi-finished product is then returned from China to Bitterfeld, Germany, where it is processed to the final quality needed for batteries.
Rio Tinto plans to build a lithium processing plant in Serbia along with the mine, which would produce lithium carbonate as the final product. According to the company, lithium carbonate from Jadar would be of suitable quality for battery use and would not require further processing anywhere in the world.
This would save Germany from transporting lithium halfway around the world and back, allowing its factories to produce the batteries needed for electric vehicles.
“This is a clear economic interest of the Germans, Mercedes, and that’s what it boils down to,” Jakšić emphasized for N1.
Who is Serbia’s Lithium Promised To?
The Financial Times reported that Serbia has promised not to sell lithium to Chinese car manufacturers, prioritizing European car companies such as Mercedes-Benz, Volkswagen, and Stellantis.
In an interview with Handelsblatt, ahead of German Chancellor Olaf Scholz’s visit to Belgrade, Serbian President Aleksandar Vučić stated that Chinese car manufacturers had expressed interest in buying lithium.
“But we told them that we are discussing this with Europeans. We are loyal to Europe… The EU needs lithium, and we want to strengthen our connection with the EU,” he added. He also stated that Serbia wants to keep the entire value chain within Serbia but has to make concessions, indicating that “smaller quantities” would go to Germany.
Mihailo Gajić from the Libek think tank describes this statement as “partly political rhetoric.” He explains that these are long-term projects, and if Rio Tinto begins lithium production, it will be tied to deliveries to well-known companies with which it already has contracts.
When asked about the “smaller quantities” that would be exported to Germany, Rio Tinto stated that the annual production capacity would be around 58,000 tonnes of lithium carbonate.
“We would strive to sell lithium primarily to domestic companies under market conditions if their demand matches our total production, which should be sufficient to power about one million electric vehicles annually,” the company replied.
“The Chinese Are Not Out of the Game”
Despite President Vučić’s claim that he told Chinese companies “no, thank you,” Boško Jakšić believes that China is not out of the game when it comes to lithium from Serbia.
He recalls that Chinese Chalco (Aluminum Corporation of China) is the largest individual shareholder in Rio Tinto, with 14.57% of shares. This means they will profit from it. Slightly smaller owners are American investment funds BlackRock (8.7%) and Capital Research and Management (5.2%).
“They are absolutely not out because Vučić wouldn’t dare to eliminate them with a unilateral decision. Serious talks were held with Beijing. He convinced them to let him do this because it benefits stability, which benefits China. The decision was made with China’s approval, not against it,” Jakšić believes.
Mihailo Gajić from Libek agrees that “there is no active opposition from China” to the signing of the EU-Serbia Memorandum and Rio Tinto’s ambitions to open a lithium mine here. He adds that lithium is also needed by Chinese battery manufacturers.
Battery Factories All Around Us
Chinese factories are sprouting up across Europe. The world’s largest electric vehicle manufacturer, China’s BYD, is building a state-of-the-art electric car factory in Szeged. According to media reports, Belgrade was also in the race for the factory but lost by eight points. As Nedeljnik reported, Belgrade positioned itself second with 508 points, while Szeged had 511.
The world’s largest battery manufacturer, China’s CATL, also chose Hungary as the location for its investment. The Hungarian Investment Promotion Agency stated on its website that CATL chose this country due to its proximity to major manufacturers like Mercedes, BMW, Stellantis, and Volkswagen. Stellantis began production of the electric “Fiat Panda” in Serbia on July 22.
This factory is emerging in collaboration with Mercedes-Benz, which will charge the new generation of its cars with batteries from Debrecen. This will be CATL’s second factory in Europe, following the one in Germany.
In Serbia, “Eleven Es,” a factory for producing lithium-iron-phosphate batteries, is already operational. It was their battery that Serbian National Assembly President Ana Brnabić held in her hands at the press conference on the day of the Memorandum signing.
Chinese Minth, which already has plants in Loznica and Šabac, has signed a Memorandum of Understanding with the Serbian government to build a third plant in Inđija. Minth is a manufacturer of electric vehicles and related automotive products. According to Nova Ekonomija, it expects support from the International Finance Corporation (IFC), part of the World Bank, to establish battery production plants in Serbia and Poland.
Minth and Inobat have also signed a Memorandum of Understanding for the entire battery value chain in Europe, starting in Serbia, according to Nova Ekonomija.
However, a more notable name is Inobat, a Slovak battery manufacturer that signed a Memorandum of Understanding with the Serbian government to build batteries for electric vehicles. One of Inobat’s investors is Rio Tinto.
When the Spatial Plan for the Jadar project was suspended, environmentalists claimed that Inobat was a way for Rio Tinto to enter Serbia “through the back door.” After the Memorandum signing between Serbia and the EU, Rio Tinto stated to N1 that the company supports “the Serbian government’s desire to create a local supply chain for electric vehicles in Serbia.”
“This is important for both Serbia and Europe. We are proud to be one of the signatories of the letter of intent supporting the development of the e-mobility value chain in Serbia,” Rio Tinto said in a statement to N1.
USA – Pushing China Out Through Lithium
Although not directly related to lithium production in Serbia, in the last two years, it seemed that the United States supported the “Jadar” project. Ambassador Christopher Hill has repeatedly emphasized the advantages of opening the mine, while noting that the final decision rests with the Serbian citizens.
Boško Jakšić says that the American interest is to separate Europe as much as possible from the East, first from Russia, and now from China.
“It is clear that the Americans are pressuring the Europeans to distance themselves from Beijing. For months, the Europeans resisted, but this year they have taken a tougher stance towards China,” Jakšić said, adding that the trade war with China will expand with the help of the USA.
The European Commission imposed tariffs on the import of Chinese electric vehicles at the beginning of July, ranging from 17.4% to as high as 37.6%. The expansion of Chinese electric cars was so significant that BYD was shipping thousands of cars directly to Germany with its own cargo ships.
Mihailo Gajić sees the USA’s interest in the Jadar project primarily as political. He explains that once the European Union is “economically untangled” from China, it will be able to politically distance itself as well. This practically means that it will be able to take a tougher political stance towards Beijing without fear for its economic interests.
However, looking at how China and European companies have intertwined investments in the electric vehicle sector, it is clear that there is no complete disentanglement. Gajić says it is a gray area, with various levels of cooperation and competitiveness between the two sides, depending on their needs.
Serbia in the Midst of It All
What does Serbia get? Besides the lithium mine, which Germany currently does not want to open on its territory, and Vučić’s promises of billions of euros, it is possible that the bill will also come due. And that bill might come from the Chinese, who Boško Jakšić says are anything but brothers.
“I wonder what other price Serbia will have to pay for consent,” says Jakšić, adding that Serbia will likely have to engage in some “compensatory work” more related to politics than economics.
“Supporting China, joining BRICS,” are possible political concessions that Serbia might need to make if Rio Tinto starts lithium production in Jadar, according to Jakšić.
When asked how simultaneous entry into BRICS and a fast-tracked EU path, promised by German Chancellor Olaf Scholz after the signing of the Memorandum, is possible, Jakšić responds that it is possible in the same way as joining the EU without imposing sanctions on Russia.
All this, he concludes, is Vučić’s “policy of balancing.”
Source : N1
