Serbia’s government on Thursday revoked Anglo-Australian mining company Rio Tinto’s licences to explore and mine lithium after protests lasting several months, ending a project that the Balkan nation once hoped would help boost its weak economy.
The project, a potential $2.4bn investment by Rio, would have catapulted the company, and the country, to among the world’s largest producers of the metal that is key to producing batteries and in extremely high demand as the world switches to electric vehicles.
But the government in Belgrade, which faces an election on April 3, has bowed to increasing resistance to the potential environmental costs of the project. It had said it would hold a referendum on the subject after polling day.
“All decisions [linked to the lithium project] and all licences have been annulled,” Ana Brnabic, prime minister, said in Belgrade. She added the government had heeded requests from environmental organisations to halt the project.
The decision came as some surprise after Brnabic had said the decision would not come until after the elections. Rio had flagged a one-year delay to the project but stood by the plans.
The planned mine, in Jadar Valley, Serbia, was perceived as a threat to the way of life of dozens of communities in the picturesque region and had drawn growing attention to the country’s environmental pollution, which is among the worst in Europe.
“As far as project Jadar is concerned, this is an end,” Brnabic said. “Rio Tinto gave insufficient information both to the local community and the government [about the impact of the project].”
Environmentalists hailed the decision as a breakthrough but said they would also insist on another demand to ban the exploitation by any miner of lithium and some other minerals in the country for the next two decades.
“One more step! We are close . . . Let’s hand Rio Tinto and the associates of these criminals a one-way ticket to Australia tonight,” Savo Manojlovic, the leader of the protest group Kreni Promeni (Move, change!) wrote on Twitter and Facebook. “Serbia is not for sale!”
Revoking the existing permits for the project comes amid strained relations between Serbia and Australia, where Rio makes most of its money and also has a stock market listing, over the decision to deport tennis star Novak Djokovic.
However, a person close to Aleksandar Vucic, Serbia’s president, said the Rio decision was in no way related to the Djokovic saga. Vucic had denounced Australian authorities for “harassing” Djokovic and called the court ruling deporting the world number one “a farce”.
Earlier this week, Rio pushed back the timeline for first production from Jadar by at least a year to 2027 because of slow progress in obtaining the licences needed to complete an important environmental assessment.
Lithium is a key material used in the batteries that power smartphones and electric vehicles, and demand is expected to surge over the next decade. Prices have risen sharply in recent months because of strong demand from China, in particular.
Jadar would be one of the biggest lithium mines in the world if the project went ahead.
Rio does have options to expand in lithium. The company last month agreed to pay $825m for the Salar del Rincón lithium project in the Salta province of Argentina, its first major acquisition in a decade.
However, if it is forced to abandon Jadar it would be a blow to Jakob Stausholm, chief executive, who has signalled a desire to bulk up in electrification metals. The company currently makes most of its income from iron ore, a steelmaking commodity.
Rio on Thursday evening said it was extremely concerned by Brnabic’s statement. It added: “Throughout our work on the Jadar project we have always operated in compliance with the laws of the Republic of Serbia. Rio Tinto is reviewing the legal basis of this decision and the implications for our activities and our people in Serbia.”