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Critical raw materials and R&D, what can Serbia offer to Germany 

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Serbia has the potential to become a significant supplier of critical raw materials to Germany and the European Union (EU) due to its natural resource base and strategic location. Serbia’s partnership with the EU and its recent agreements highlight the country’s capacity to contribute to the European supply chain of critical raw materials, which are essential for the production of batteries, electric vehicles and other high-tech industries.

Opportunities for Serbia to supply critical raw materials

1. Lithium and other mineral resources:

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• Serbia has substantial lithium reserves, which are crucial for the production of batteries used in electric vehicles (EVs) and renewable energy storage systems. The development of lithium production in Serbia, especially through projects like the Jadar lithium project, positions the country as a key player in supplying this critical material to Germany and other EU nations.

• In addition to lithium, Serbia has significant reserves of other minerals such as copper and zinc, which are vital for various industrial applications, including the electronics and automotive sectors.

2. Strategic partnerships and agreements:

• Serbia and the EU have signed a Memorandum of Understanding (MoU) on sustainable raw materials, battery production chains and the electric vehicle industry. This partnership aims to integrate Serbia into the EU’s supply chain for critical materials, ensuring sustainable and reliable sourcing that adheres to high environmental and social standards.

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• The MoU also focuses on cooperation in research and innovation, development of human resources, and mobilization of financial instruments to support the growth of Serbia’s raw material sector and its alignment with EU standards.

3. Support for e-mobility and green economy:

• Serbia’s partnership with the EU and Germany extends to the development of an integrated e-mobility ecosystem. This includes supporting the production of batteries and electric vehicles, promoting clean energy and ensuring compliance with the EU Green Deal and the Green Agenda for the Western Balkans.

• The Serbian government is actively promoting investment in the mining and processing of these materials, positioning itself as a reliable partner for Germany’s transition to a sustainable, low-carbon economy.

4. Geopolitical and economic advantages:

• Serbia’s geographical proximity to the EU and its developing infrastructure make it an ideal logistics and supply hub for exporting raw materials to Germany and other European markets. Its favorable trade agreements and commitment to harmonizing regulations with the EU further facilitate cross-border trade and investment.

Benefits for Germany

For Germany, Serbia’s development of its raw materials sector offers a stable and geographically close source of critical minerals, reducing dependency on imports from distant or politically unstable regions. This supports Germany’s strategy of securing critical raw materials for its industries, particularly for the production of electric vehicles and other technologies essential for the green transition.

Serbia’s cooperation with Germany and the EU, supported by international financial institutions, provides a foundation for sustainable resource extraction and development of supply chains that align with European environmental and social standards. This collaboration will not only boost Serbia’s economy but also contribute to the EU’s strategic autonomy in critical raw materials.

Serbia has significant potential to support Germany’s critical raw materials supply chain through its existing resources, strategic R&D capabilities and favorable nearsourcing conditions. In addition to providing raw materials like lithium, copper and other essential minerals, Serbia’s development of Research & Development (R&D) centers and partnerships with German companies enhances its role as a key player in the supply of critical materials and related technologies.

Serbia’s critical raw material supply potential

1. Raw material resources:

• Serbia has substantial reserves of lithium, which is crucial for the production of batteries used in electric vehicles (EVs) and renewable energy storage systems. The development of lithium extraction and processing facilities is one of Serbia’s key strategic projects, aimed at reducing Europe’s dependency on imports from non-European countries.

2. Strategic partnerships with German companies:

• German automotive and technology companies such as ZF Friedrichshafen and Brose have established R&D centers and production facilities in Serbia, enhancing the region’s capacity for innovation and advanced production of electric mobility components. For instance, ZF Friedrichshafen has invested €160 million in its R&D center in Pančevo, which focuses on developing and testing electric drives and other e-mobility technologies. This facility is now the largest e-mobility location outside of Germany for ZF, demonstrating the strategic importance of Serbia in their global supply chain.

• Similarly, Brose has invested €180 million in a new production site and R&D center in Pančevo, which will focus on the development and production of electric motors and drives, making it a central hub for supplying the European market with advanced automotive components.

R&D and nearsourcing benefits for Germany

1. R&D integration:

• Serbia’s R&D capabilities have been enhanced through investments in high-tech research centers. These centers, like the ZF Engineering Center in Pančevo, focus on developing cutting-edge technologies such as electric traction drives, software calibration, and system validation. This investment in local R&D enables German companies to innovate and test products closer to their European manufacturing sites, reducing development times and logistics costs.

2. Nearsourcing and logistics efficiency:

• By establishing production and R&D centers in Serbia, German companies benefit from proximity to the EU market and lower operational costs compared to other Western European locations. Serbia’s strategic location and well-developed infrastructure facilitate efficient logistics and supply chain management, enabling just-in-time production and delivery of critical components to Germany and other European countries.

3. Workforce and skill development:

• German companies are leveraging Serbia’s highly skilled labor force and collaborating with local universities to foster innovation and technological development. These partnerships focus on training the next generation of engineers and specialists in fields such as e-mobility and advanced manufacturing, thereby ensuring a sustainable supply of skilled professionals.

Serbia’s combination of natural resources, growing R&D capabilities, and strategic partnerships with German companies positions it as a key supplier of critical raw materials and advanced technologies for the European market. The focus on sustainable development and integration into the EU’s supply chain aligns Serbia’s growth with Germany’s strategic objectives for securing raw material supplies and fostering innovation in green technologies.

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