| Thousands of environmental protesters block roads in Belgrade and other Serbian towns on Dec. 4, 2021, angered by mining giant Rio Tinto's plans to extract lithium in the Balkan nation. Serbia's government revoked the company's licenses Jan. 20. |
Serbia's decision on Jan. 20 to revoke permits for a Rio Tinto Group lithium project will eliminate almost one-third of future European lithium production, dealing a heavy blow to the continent's battery-makers and electric vehicle manufacturers.
The $2.4 billion Jadar lithium project, now on life support amid local opposition by environmental activists, would have ranked fourth among 2021 producing mines. And at peak capacity of 58,000 tonnes per year, the mine would have outscaled many of the projects expected to come into production in the next few years. If it had gone into full production in 2029 as planned, the Jadar project would have made U.K.-Australian mining giant Rio Tinto one of the largest lithium producers in the world.
A world hungry for lithium to foster its low-carbon energy transition faces a looming deficit of the white metal.
"It certainly doesn't help when we're already in a shortage and we need to see as much investment as possible go into lithium in order to meet future demand growth," Seth Goldstein, a senior equity analyst focused on lithium at Morningstar, said of the revocation of Rio Tinto's licenses. "Government opposition to big projects with the potential to become a large-scale resource like the Rio Tinto project will increase the amount of time it will take for supply to catch up."
Reuters reported Jan. 20 on Serbian Prime Minister Ana Brnabić's announcement that the government would revoke the miner's licenses. The Serbian prime minister and Ministry of Environmental Protection did not respond to requests for comment.
Rio Tinto did not say if the project was dead.
"Rio Tinto is extremely concerned by the statement from the Prime Minister Ana Brnabić about canceling the spatial plan and revoking licenses related to the Jadar Project," Rio Tinto spokesperson David Outhwaite told Market Intelligence in an email. "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 to our activities and our people in Serbia."
If Jadar went ahead in the late 2020s, as planned by Rio Tinto, the mine would have accounted for about 27% of European lithium production by 2030, according to Benchmark Mineral Intelligence lithium analyst George Miller. The project would have comprised about 2.5% of estimated global lithium production in 2030.
"It does seem like it's a change in fate, quite a savage change in fate," Miller said.
European battery and EV manufacturers could now face a "real problem" in sourcing more local lithium that does not depend on a supply chain otherwise dominated by China for processing and South America and Australia for mining, Miller said. Assuming Jadar does not move forward, there are no other European projects of Jadar's size waiting in the wings to fill the continent's lithium supply gap.
Globally, nine new and restarted lithium projects — five hard rock and four brine operations — could bring about 355,000 tonnes of LCE capacity online by the end of 2023, according to Market Intelligence research, but the market will remain tight. The anticipated lithium shortage has sent prices for the metal sky high. Lithium carbonate prices hit a record high at the close of 2021, with Benchmark Mineral Intelligence's battery-grade lithium carbonate EXW China price breaking $40,000/t for the first time on the final day of the year.
"Commissioning of new and restart projects, as well as the expansion of existing operations, will be much needed to keep pace with unprecedented demand growth," Market Intelligence analysts said in a Jan. 18 lithium report.
Rio Tinto's project had been hampered by protests even before the permits were revoked. In December 2021, the town council of Loznica, Serbia, voted to stop the development plan that allowed the project. And on Jan. 17, Rio Tinto said sales of lithium from the Jadar project would be delayed and saleable production would not be delivered until 2027, instead of 2026 as initially planned, according to the company's fourth-quarter 2021 production report.
While Jadar's future remains unclear, Miller said greater clarity on the project's path forward could come after Serbian general elections set to be held in April.
Lithium mines around the world face environmental challenges. Canadian lithium developer Lithium Americas Corp.'s Lithium Nevada, or Thacker Pass, project has been delivered legal challenges by environmental groups, though the company received court approval to dig in July 2021 and said the permit process is on track. Australian lithium company Ioneer Ltd.'s Rhyolite Ridge mine, also in Nevada, has been weighed down by extended environmental reviews and regulatory disputes but is moving forward, according to the company. Public backlash against lithium development also imperiled a lithium project proposed by Lusorecursos Lda. in Portugal in April 2021, according to a report by Politico.
But few lithium projects have suffered a setback like Jadar.
"This was set to be the biggest producing lithium project in Europe," Miller said. "It's going to really damage the pipeline for lithium production within Europe."