The level of fees that mining companies pay for the exploitation of mineral resources in Serbia has once again come into public focus after President Aleksandar Vučić stated that the government was unable to increase the so-called mining royalty for years due to political pressure and international relations.
The issue has long been contentious, and Vučić reiterated that Serbia wanted to raise the mining royalty but was prevented from doing so, Danas reports.
“We have by far the lowest mining royalty. We were not able to change it even when we tried, because there was tremendous pressure and we were told we were altering business conditions. We did not dare to increase it back in 2016 or 2017. We did not want to harm political relations,” Vučić said.
The president has previously spoken about attempts to increase mining royalties, noting that the process is not simple. He added that when he tried to raise the royalty, “everyone from Russia reacted strongly,” referring to Serbian oil and gas resources now controlled by Russia’s Gazprom.
Criticism that Serbia’s mining royalties are too low is common in public debate. Although Vučić agrees they should be higher, Serbia appears constrained because raising the fees could strain political relations.
He also argued that mining companies will leave the country if they cannot secure a reasonable profit.
What is the mining royalty in Serbia?
Professor Čedomir Beljić of the Faculty of Mining and Geology in Belgrade explained to Danas that the term “mining royalty” is not technically correct, since Serbia charges a fee for the use of mineral resources, also known as a royalty.
The royalty is regulated by the Law on Mining and Geological Exploration and the Law on Fees for the Use of Public Goods and represents an important revenue source, especially for local governments. Fees range from 1% to 7%, depending on the resource.
The highest rate—7%—applies to oil, natural gas and related gases. For metallic and non-metallic ores, the fee is generally 5% of revenue.
Law also defines distribution: 60% goes to Serbia’s state budget, 40% to the local municipality; if extraction occurs in an autonomous province, the province receives 10%, the local government 40%, and the state 50%.
Beljić noted that royalty systems in Europe vary widely depending on each country’s specific circumstances and the nature of its mineral resources.
He added that although the Serbian system has often come under public scrutiny—sometimes fairly, sometimes not—efficient royalty collection requires strong institutions, expertise, and consistent regulatory oversight. He emphasized that mining is a long-cycle industry that depends on economic stability and regulatory predictability.
Royalty fees, he said, can be a development tool if integrated with broader industrial policy. If Serbia’s mining sector remains limited to raw material extraction, however, royalties should be higher to ensure adequate compensation for environmental and economic impacts.
Royalties in Serbia are very low
Professor Goran Radosavljević (FEFA Faculty) told Danas that Serbia has never managed its natural resources properly—whether water, forests, metals or minerals.
“Royalties for resource exploitation are extremely low. Often it is unclear who pays what, or what reference prices are. State-owned companies for years paid nothing at all. Even recent legislation kept fees at low levels. The system is so poorly designed that if Serbia had large oil and gas reserves, it would become Nigeria before it ever resembled Norway,” he said.
He noted that NIS extracted around 900,000 tons of crude oil and 400,000 tons of gas (in oil equivalent) annually from 2014 to today. Their market value is about €550 million per year. With a royalty rate of 3%, Serbia received roughly €16.5 million annually — far below what would be appropriate for such volumes.
Radosavljević said a rate closer to 15% would be more realistic, which would bring the state an additional €66 million annually. He concluded that royalties in Serbia are “extremely inadequate” and that much of NIS’s profit comes from oil and gas extraction.
Is raising royalties realistic?
Economic analyst Bogdan Petrović explained that mining royalties in Serbia, as elsewhere, depend on the type of mineral mined. Mining is capital-intensive and requires large upfront investments.
Petrović noted that oil and gas extraction is generally simpler compared to mining metals such as copper or lithium.
Serbia’s most significant metal resource is copper, and he emphasized that Serbia’s royalty for copper is consistent with global standards. Mines also pay a wide range of taxes: payroll taxes, environmental fees, property tax, corporate tax, and dividend tax.
Royalty for copper is 5% of revenue, not profit — a substantial burden considering all other costs.
Coal royalties are 3%, but because EPS is the main consumer of coal, any increase would translate directly into higher electricity prices.
Royalties for oil and gas are set at 7%, which is well below international levels, but Serbia’s deposits are relatively modest and extraction costs higher.
He added that mining carries major financial risks—companies may invest in exploration only to discover insufficient ore. The sector also requires extensive environmental compliance, land acquisition, processing facilities, waste disposal infrastructure, and land rehabilitation.
Because of this, Petrović argued that sharply increasing royalties for metal ores would deter investors and harm mining towns such as Bor and Majdanpek, which depend entirely on mining for economic survival.
Regarding oil and gas, he said increases are possible—but Serbia is constrained by its contractual obligations with the Russian Federation regarding NIS.
