Serbia stops a billion-dollar lithium mining project.

The government on Thursday withdrew the mining license recently granted to the British-Australian mining company Rio Tino.

Lithium is an important raw material for the production of car batteries.

She had already promised such a decision after weeks of demonstrations by environmentalists and residents of the region affected by the mining project.

Christopher Hein

Business correspondent for South Asia/Pacific based in Singapore.

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Andreas Mihm

Business correspondent for Austria, Central and Eastern Europe and Turkey based in Vienna.

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The decision came just days after Australia expelled Serbian tennis pro Novak Djokovic, who has not been vaccinated against the virus and the world's best player, Novak Djokovic, which incensed Serbian President Aleksandar Vučić.

Rio Tino's share price plummeted after the cancellation.

pressure from environmental groups

Serbian Prime Minister Ana Brnabić justified the cancellation of the $2.4 billion project with pressure from environmental groups. "All licenses have been cancelled," Brnabić said after a government meeting in Belgrade. She added, "As far as the Jadar project is concerned, this is the end." Parliamentary elections are scheduled for early April in Serbia. Autocratic ruling President Vučić wants his so far comfortable position Don't jeopardize the majority: "We listen to our people and it is our job to protect their interests, even if we disagree," Brnabić was quoted as saying in agency reports.

In response to the ongoing protests by thousands of demonstrators and the increasingly critical attitude of the Serbian government, the mining company had already interrupted the preliminary work and postponed the start of production of the mine project, which was planned for 2026, by a year. The local authorities had previously refused the relevant land use permits. There is fear locally that more than 20 villages will have to give way to mining.

Prime Minister Brnabić again accused Rio Tinto of not having sufficiently informed the communities about the project.

It is striking that the Belgrade government has so far been less accommodating in protests against other environmentally damaging and polluting industrial projects, often by Chinese owners.

Rio Tinto had repeatedly assured that they would not only comply with national environmental protection regulations, but also with the more extensive requirements of EU law.

Serbia is not part of the Community.

Rio Tinto stock plummets

The decision is a major setback for the mining group, because the group wanted to expand its position as a lithium producer with its involvement in Serbia and catch up with the largest in the world. In the final phase, the Jadar mine should produce 58,000 tons of refined lithium carbonate per year, it would be the largest lithium mine in Europe. In Serbia there had already been speculation that battery manufacturers would also settle in the wake of lithium production.

The share price of the Australian-British natural resources giant Rio Tinto lost a good 5 percent on the Sydney stock exchange on Friday. By being kicked out of Serbia, the group missed the opportunity to become Europe's largest supplier of lithium, a raw material for car batteries, among other things. Rio Tinto has invested almost half a billion dollars in exploring for deposits in Serbia. In a statement on Friday, the Australian government referred to the “expertise of Australian commodity groups” and “the economic benefits of such an investment”.

The company's board of directors was "very concerned" and announced that they wanted to have the legal basis of Belgrade's decision examined.

The project in Serbia was the first major decision of the new Rio Tinto CEO, Jakob Stausholm.

Critics of the new mine also pointed to Rio Tinto's Chinese ownership and the election of former Canadian ambassador to Beijing and former McKinsey boss Dominic Barton as new chairman of Rio Tinto's board of directors: the state-owned Aluminum Corporation of China holds just over 10 percent of the natural resource group.

Does the tennis star's expulsion matter?

In Australia, the decision was not only seen with a view to the elections there, but in particular as a response to the expulsion of the number one in the world tennis rankings, Novak Djokovic, on Sunday. The tennis player showed solidarity with the demonstrators on social networks in December and sent a picture of the protests under the title "Clean Air". On Friday it was said on Twitter that in return for the withdrawal of the visa, Rio Tinto had been expelled from Serbia. Even during the protracted process, senior Serbian politicians repeatedly threatened to respond to the Australian government's actions.

With the mine, the group would have advanced among the ten largest lithium producers in the world.

Analysts in Australia warned that the world's lithium shortage will now last longer than the three years previously feared.

The automobile manufacturers would feel the effects of this.

The lithium price skyrocketed after the decision from Belgrade.

Boston Consulting estimates that global demand for lithium will almost quadruple by 2030.