A recent analysis by economic experts Zoran Drakulić, Boško Mijatović, Danica Popović and Dejan Šoškić concludes that the Jadar Project should be halted, countering claims from the Serbian government about its purported economic benefits.
The experts argue that the anticipated positive impacts of the Jadar Project are overstated. They highlight that Serbia stands to gain only €17.4 million annually from the project, translating to just €2.6 per capita. Given the project’s significant economic and financial risks, they assert it is unjustifiable.
Key concerns:
- Infrastructure costs: Serbia would bear the entire cost of infrastructure development for the Jadar Project, estimated at several hundred million euros. This includes building roads, railways, and utilities, all of which would benefit Rio Tinto, the project’s operator.
- Lack of ownership: Serbia would not hold any ownership in the Jadar Project. Instead, Rio Tinto would retain full control over lithium extraction, with Serbia receiving minimal direct returns.
- Environmental risks: In the event of an ecological disaster, such as flooding or tailings spills, Serbia would be responsible for costly remediation, potentially running into hundreds of millions of euros.
- Questionable subsidies: The government plans to provide €419 million in subsidies to InoBat, a relatively unknown Slovak company, for an electric battery factory, without guarantees or transparency regarding its capability to deliver.
Foreign revenue outflow:
According to a Rio Tinto report referenced by President Vučić, the project could generate €1 billion in annual revenue. However, the analysis points out that much of this revenue would be offset by costs of goods and services, predominantly benefiting foreign suppliers rather than the Serbian economy.
Profitability for Rio Tinto:
Rio Tinto is expected to realize a net profit of €11.4 billion, with a quick return on its €2.55 billion investment anticipated within five years. This arrangement would allow the company to recoup its risks early on, profiting significantly in the latter years of the project.
Limited returns for Serbia:
Projected annual revenues for Serbia amount to €184.5 million, a modest figure given the scale of the project and the associated environmental risks. The anticipated mining royalties and fees would not exceed €40 million annually, while corporate income tax might contribute around €85 million.
The analysis emphasizes that for the project to be viable, Serbia would need to cover the costs of all preparatory infrastructure work, effectively shifting the financial burden onto Serbian taxpayers.
Unprecedented benefits for Rio Tinto:
The experts argue that such extensive benefits for Rio Tinto are unprecedented in similar projects globally. The financial and infrastructural commitments required from Serbia raise serious concerns about the project’s sustainability and fairness.
Market viability:
The analysis challenges the project’s underlying assumption that lithium carbonate will maintain an average selling price of $15,600 per ton throughout its duration. The authors note that this projection is overly optimistic, especially given that lithium prices have plummeted by 81% in just two years.
Conclusion:
In light of the evidence presented, the authors conclude that the Jadar Project’s economic impact on Serbia is highly uncertain, potentially approaching zero in the best-case scenario. They reiterate that the project is unjustified and should be suspended.
