The Anglo-Australian mining company Rio Tinto’s desire to become Europe’s leading supplier of lithium, a critic metal for manufacturing of electric vehicles was harmed on Friday when Serbia canceled its lithium exploration permits due to environmental concerns.
Serbia’s decision comes as the country prepares for a general election in April, and as tensions between Belgrade and Canberra have deteriorated following the deportation of tennis star Novak Djokovic from Australia on Sunday due to the country’s Covid-19 entrance laws.
This is also a major blow for Rio Tinto, which had hoped that the project would help it become one of the top ten lithium producers in the world. Lithium is a critical component in batteries.
Rio’s only lithium project is the mine, and the firm just announced an agreement to buy a second lithium asset for $825 million as part of its strategy to expand its battery materials business.
Rio’s Australian shares fell 4.1 per cent after hitting a high of 5.1 per cent in the Australian stock exchange, the lowest intraday decrease since August 2021. The benchmark index was down 2.3 per cent at the close.
Rio’s stock was down more than 3% in London by 3:55 a.m. ET, slightly underperforming its rivals.
The decision was made after several green groups requested that the $2.4 billion Jadar lithium project, which was set to begin production in 2027, be halted, according to Serbian Prime Minister Ana Brnabic at a news conference in Belgrade.
Last year, tens of thousands of protesters stopped roads in protest of the government’s support for the project, demanding that Rio Tinto leave the nation and compelling the local municipality to abandon plans to give land for the facility.
The judgment came just days after ties between Australia and Serbia reached an all-time low when tennis star Novak Djokovic was deported before the Australian Open.
Support to an Instagram story post commenting on a photo of anti-mining rallies uploaded by digital sports platform The Bridge was extended by Djokovic in his support for “clean air.”
Rio being deported from Serbia was quickly mocked on Twitter.
Serbia’s decision has “seriously disturbed” Rio, which is evaluating the legal foundation for it.
Serbia’s decision to cancel Rio’s permits was met with disappointment by the Australian government.
“We note the strong economic benefits of the significant investment by Rio Tinto in Serbia. Australian resources companies have an outstanding reputation around the world, particularly when it comes to their expertise,” the government said in a statement to Reuters.
Rio has already invested $450 million on pre-feasibility, feasibility, and other research on Jadar to better understand the deposit’s characteristics, according to a project fact sheet released in July by the business.
“The level of opposition to it has really ratcheted up over the last six months,” Credit Suisse analyst Saul Kavonic said of the Jadar mine.
“We’ve been highlighting for a while now there would be about $2 a share at risk if the government cancels it,” Kavonic said.
Rio has pushed back the start of production from Jadar by a year, to 2027, citing difficulties in regulatory permissions.
(Adapted from KRDO.com)