By Biagio Carrano
On July 19 in Belgrade, Olaf Scholz achieved a dual geopolitical objective with the signing of the Memorandum on Critical Raw Materials. In addition to explicitly securing Germany’s access to a strategic mineral like lithium, found in the deposit along the Jadar River, there was also a political outcome that Germany had been pursuing for years: the political weakening of Aleksandar Vučić. This outcome arises from the contradiction within the Memorandum: to prove himself reliable to European partners, the Serbian leader will have to overcome strong public resistance to a project that will undoubtedly transform hundreds of hectares from agricultural land into an open-pit mine, causing long-term environmental damage that is currently incalculable. However, if he yields to popular protests and cancels the agreement, signed in the presence of EU representatives, the German chancellor, and international banking institutions, he wouldn’t gain any additional votes; his international credibility would be shattered, and his power in the country would be irreparably weakened.
How much does the mine cost and how much is it worth?
Since the early 2000s, the Anglo-Australian multinational Rio Tinto has conducted geognostic surveys in the valley traversed by the Jadar River near the town of Loznica, which led to the discovery in 2004 of the so-called Jadarite—a sodium lithium boron silicate hydroxide with fluoride (chemical formula LiNaSiB3O7(OH)) from which lithium and boron with a high degree of mineralization can be extracted. According to Rio Tinto, the deposit may contain reserves of 1.2 million tons of lithium, nearly one-tenth of the world’s estimated reserves of 14 million tons, and is capable of meeting 90% of the European Union’s current lithium demand. However, unlike all other lithium mines in the world, this one would be developed in an agricultural area populated by about 20,000 people, who would need to be compensated and relocated to other areas of the country.
The area designated for mining activities is estimated to extend between 2,031 and 2,431 hectares, of which 533 hectares (203 hectares of forests and 317 hectares of arable land) would be immediately transformed in the early stages of the project’s implementation. It is estimated that 850 hectares would undergo subsidence due to the excavation of rocks and the extraction of water from underground aquifers needed for production processes. The waste rocks and materials used in the production process would be located along the Jadar and Korenita rivers.
Although the deposit discovered along the Jadar River has exceptional lithium concentration levels, the mineral is not easily extracted. To obtain one kilogram of pure lithium, 3 to 5 tons of rock must be processed. Therefore, to obtain the 58,000 tons that Rio Tinto intends to produce once the mine is fully operational, at least 1.74 million tons of rock must be processed and extracted each year. These production wastes will be placed along the Stavica stream basin, after clearing 26,000 cubic meters of trees.
Lithium production from rocks involves treating them with highly concentrated sulfuric acid at a temperature between 80 and 95 degrees Celsius. At the end of the process, boric acid, lithium carbonate, and sodium sulfate are obtained as byproducts. To treat the 853,000 tons of rock necessary for the annual production, Rio Tinto will need to use 320,000 tons of highly concentrated sulfuric acid, as well as fuels, mineral oils, lubricants, cement, and other substances, whose waste would be disposed of in landfills, with a high risk of infiltration throughout the river basin, which flows into the Drina River, a tributary of the Sava, which in turn is a tributary of the Danube. Recent studies on the impact of geognostic surveys conducted so far have already detected arsenic, lithium, and boron levels in the soil that are many times higher than the limits of plant and animal toxicity.
Today, the price of lithium carbonate futures (the raw material used to produce enriched lithium for common lithium-ion batteries) averages 73,500 yuan per ton, or $10.24 per kilo at the current exchange rate. The revenue from the annual sale of the product extracted in Serbia, unprocessed for battery use, would therefore be approximately $595 million at current prices. With a high extraction royalty of 5%, the lithium from the Jadar River basin would guarantee the Serbian state about €27 million annually. Rio Tinto would also extract 248,000 tons of borax annually, which currently has a wholesale price of $1,500 per ton (i.e., $1.5 per kilo), and sodium sulfate, which sells for $150 per metric ton, from which they would earn approximately $400 million at current prices. Therefore, the mine would generate about $1 billion in annual revenue at current prices. Considering that the technology for extracting lithium from rock currently costs about $2,540 per ton, and that borax production is cheaper, we can roughly estimate a first margin for the project at 70%, or about $700 million annually.
Rio Tinto claims to have invested $2.55 billion in the project so far. Considering the investments to open the mine and the costs for ordinary management, in light of the current declining lithium prices, this seems like a good but not extraordinary investment. Lithium prices have been declining for years due to two factors: explorations have led to the constant discovery of new deposits over the last decade, and the development of new energy storage technologies (sodium, flow, graphene, magnesium batteries) is bringing the end of lithium use for this purpose closer. If the project initially envisioned a useful life of the mine of sixty years, it will probably be necessary to extract larger quantities in shorter timeframes to at least match the prices of the raw materials, which are already on a downward trend.
From industrial investment to geopolitical challenge
The opening of the Serbian deposit by itself will not have a radical impact on the global market, except for lowering the price of a raw material that has already been declining for years because it is no longer considered irreplaceable. However, in this historical phase, the concept of a global market means much less than it did before. Europe, and Germany in particular, are called to build their energy and industrial autonomy, severing supply ties with Russia (even physically, as in the case of North Stream) and with China. Therefore, the Serbian deposit would allow European countries to almost completely replace their dependence on China for lithium. In many ways, the geopolitical value of the mine in the Jadar Valley outweighs its industrial value.
When, in January 2022, Serbian politicians, starting with President Vučić and former Prime Minister Ana Brnabić, said that they had listened to the popular protests and that the Rio Tinto project was definitively closed, they were not lying. That project, conceived as a possible foreign investment by the world’s third-largest mining multinational, which counts Aluminium Corporation of China, Blackrock (a buyer of Serbian foreign debt), The Vanguard Group, and Norges Bank as its main shareholders, has transformed into something much more strategic, even though it was never completely halted. After all, in January 2022, few observers predicted Russia’s attack on Ukraine. Thus, what was once a potential industrial investment has turned into a political and geopolitical challenge that today involves Germany, the European Union, Italy, the European Bank for Reconstruction and Development, and other Western financial and political entities. Essentially, the entire Western world considers the opening of the mine by Rio Tinto as an essential step in preparing for the upcoming competition with China, the Russian Federation, and their allies.
2027: The deadline
According to many analysts, China will be ready to invade Taiwan in 2027, triggering a reaction from the United States and its allies. While being ready—i.e., achieving the appropriate military and operational capability for that objective—does not necessarily imply carrying out the objective, a sense of urgency is characterizing U.S. strategies in the Pacific, so within a few years, it will be necessary to resolve some ambiguous situations in other parts of the world. Securing Europe means, if not eliminating, at least reducing Chinese and Russian influence over certain countries that have been most affected, such as Germany (Russian gas, industrial supply chains in China), Italy (the cancellation of Italy’s participation in the so-called Belt and Road Initiative is a step in this direction), and Serbia.
Coincidentally, the specialized EXPO hosted by Serbia, in which the government is heavily investing, will take place in 2027. Of course, this doesn’t mean that a war with China will necessarily break out that year, but the Jadar Valley mine should certainly be operational by 2027-2028, specifically in response to geopolitical tensions. Meanwhile, Europe should manage to complete a value chain for electric storage independent of China’s. 
In this paradigm shift, Serbia is called to a radical repositioning. In the previous phase of increasing global trade and cooperation, a small peripheral country like Serbia could be tolerated in its multilateralist ambitions if, behind the scenes, it provided its counterparts with what they demanded: realism on Kosovo for European partners, viability for Chinese capital and interests in the region, adherence to Russian gas geopolitics, and finally, when room for manoeuvre was already shrinking, 855 million euros worth of Serbian arms to Ukraine. But in a world that is fragmenting into various geopolitical blocs polarized around the U.S.-China competition, Serbian multilateralism and the ambiguities it entails are no longer tolerated.
If Germany is forced to give up Russian gas and long supply chains from China, it cannot tolerate smaller European countries still enjoying these competitive advantages. On the contrary, Germany is responding to the crisis generated by the new international scenario by strengthening short supply chains on a continental basis: sourcing materials, labour, and specialized personnel from the Balkans and Central-Eastern Europe, and components from Italian subcontractors who are already being asked to reduce their dependence on Chinese materials.
As the geopolitical blocs distance themselves, ‘the island’ called Serbia cannot escape sliding toward the West. China and Russia are too far away, while recent friends, the UAE and Saudi Arabia, are pushing it westward. EXPO 2027, a celebration of Serbian diplomatic multilateralism that led to winning the bid for the event, could mark the completion of this pro-Western repositioning.
Who betrays and who protects the Serbs?
But how can the Serbian population be convinced of the necessity of an open-pit mine with enormous environmental impact, and of the abandonment of the diplomatic autonomy that Serbia has always sought to pursue and certainly flaunt, beyond the substantive issues? President Vučić faces three intertwined challenges.
The social challenge involves managing dissent and protests, which are essentially spontaneous, without resorting to significant violence from the police, while trying to discredit, co-opt, dissuade, or otherwise neutralize the protest leaders without leading to dramatic clashes that would further diminish support for the current system of power.
The political challenge lies in determining which entities, local or international, might seek to exploit the protests: the internal political opposition will try to revitalize itself through them, with the pro-European faction finding itself opposing an agreement with the EU itself; historically friendly countries might attempt to make it as difficult as possible for the European Union to access these strategic resources. The protests will be a hall of mirrors for various countries and entities, both inside and outside Serbia, who will simultaneously flatter and condemn the organizers.
The communication challenge involves countering the accusation of having betrayed the country by “selling it out” to Germany and multinational corporations, thereby being labelled with the accusation that the current Serbian president has so often used against those who opposed his positions. In this context, a “traitor” (izdajnik in Serbian) is not someone who changes opinion or party, but someone who breaks agreements and promises, damaging the family, the people, the motherland (which in Serbian is referred to as the fatherland, otadzbina, derived from the word otac meaning father). Thus, a traitor is not just a turncoat, a “preletac” as there are many, but someone who endangers the health, dignity, and future of their community, breaking the bonds of blood and trust within a group. There is no worse accusation for a Serbian politician than this one.
What to communicate, how and to whom?
So how can the environmental degradation of a region that has so far relied on agriculture and rural tourism be justified? The European Union’s directive to open mines on the continent to become more independent from China in the sector of strategic minerals and rare earths finds little support in a country like Serbia, where China has always been portrayed as a reliable friend in times of difficulty.
Nor can the royalties that the Serbian state will collect or the development of an electric vehicle supply chain in the country be persuasive arguments. This supply chain could follow the same trajectory as the previous FCA investment in Kragujevac – large public investments leading to great expectations, only to result in unmet promises, low wages at first, and layoffs later. After all, Nobel Prize winner Stanley Whittingham believes that lithium will be crucial for the next 10 to 20 years before being replaced by more efficient technologies.
The mining tradition in Serbia, highlighted by Prime Minister Vučević, is indeed a fact, but the Serbs of 2024 certainly do not aspire to work in mines.
The need to position the country at the tables of the circular economy and the environmental transition of the European Green Agenda means little to a country that continues to predominantly and unashamedly use lignite to produce electricity.
The adherence to international agreements, especially with Germany, provokes further opposition in light of a historically complex, if not historically adversarial, relationship.
In short, it’s difficult to find a convincing argument capable of mobilizing even the electorate of the Serbian Progressive Party, which this time does not seem to be following its leader. The conceptual and value universe of the Serbian Progressive Party’s voter base has been built on the idea of a strong and proudly independent fatherland, on the Serbian Orthodox identity preserved in monasteries nestled in Serbian nature, where the relationship with the rural world is idealized in the memory of fathers and grandfathers, and on the acceptance of modernity only when it can improve living standards compared to the rural context—an electorate that is distrustful, if not inherently hostile, to the European Union and its social and ecological agenda.
In Mali Zvornik, when confronted with the arguments of Sanja Sakan, one of the scientists who drafted the first study on the impact of Rio Tinto’s exploratory research, published in the prestigious journal Nature, President Vučić could only send one message: “We will not do anything that will jeopardize the quality of our nature and the lives of our children.” But taken literally, this statement would simply imply not opening the mine.
The knight’s move
Cornered, Vučić is now seeking dialogue with the very organizers of the protests, aware that a head-to-head confrontation against widespread dissent within the population and his own party over the project could lead to a crisis that might cost him his power. The protest leaders, who were arrested on the morning of Sunday, August 10, for interrupting public service and sentenced to 40 days in prison in a summary trial, were released after just one day, with judges immediately, and unusually, accepting their lawyers’ requests for release.
Vučić cannot disregard an international agreement with the European Union, Germany, the European Bank for Reconstruction and Development, and the development banks of Germany and Italy—KfW-Kreditanstalt für Wiederaufbau and Cassa Depositi e Prestiti—but getting the Serbian population to accept this agreement has become his greatest political challenge. This time, it’s not about negotiating small steps on statements, documents, license plates, citizenship rights, or the movement of goods and people—issues that are sensitive but distant from the daily lives of most Serbs, as in the case of Kosovo. Instead, it’s about risking being seen as the one who allowed the environmental degradation of thousands of hectares of land just an hour’s drive from the capital. An unacceptable prospect, to be cornered, alone.
Therefore, the responsibility must be collective – when the commission of experts appointed by the Minister of Health presents reassuring data and arguments for the Serbian citizens, the entire Serbian Progressive Party, indeed the entire governing coalition, must unwaveringly support the mine. “Kosovo is Serbia” and “Lithium extraction is safe” will be the two identity slogans that will mark collective loyalty to the leader and must be promoted in parallel. Whether they are based on the reality of the facts is not a matter that concerns post-truth politics.
But unlike the slow de facto recognition of Kosovo, the lithium issue will need to move at a much faster pace. When cornered, Aleksandar Vučić has always shown that he knows how to make the knight’s move, which on the chessboard moves on both the white and black squares.
Just as the Kosovo issue has so far been the best guarantee of political longevity for Vučić, the Rio Tinto issue can similarly offer him not only an extension of his power but also credit from the Western bloc that will benefit him well beyond the end of his political career.
Scientists, farmers, environmentalists, activists, and various idealists will still have the freedom to walk away from the game—or the country.
Since the launch of eastCOM Consulting in 2008, I have led the complete development of new foreign investments in Serbia and, together with entrepreneurs, transformed their projects into profitable realities.
