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Serbian mining rents criticized as insufficient amid Government claims

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Experts in Serbia have raised concerns about the low level of mining rents, despite claims by Serbia’s Minister of Mining and Energy, Dubravka Đedović Handanović and President Aleksandar Vučić that these rents are among the highest globally.

According to the Law on Fees for the Use of Public Goods, mining rents in Serbia range from one to seven percent, depending on the resource. For example, the rent for jadarite, which would be extracted by Rio Tinto in Western Serbia, is set at five percent. In contrast, the rent for oil and gas is seven percent, though Russian company Gazprom benefits from a preferential rate of three percent.

Retired professor Božo Drašković has criticized Vučić’s statements as politically motivated. “Vučić’s claims about mineral rents should be viewed through the lens of political manipulation,” Drašković said. He argued that the Serbian government’s claims are largely propaganda aimed at achieving political goals rather than based on concrete and reasonable policies.

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Drašković questioned how the five percent mineral rent for resources like lithium and copper was determined. “We lack a precise and transparent methodology for calculating mineral rents, which often leads to arbitrary decisions influenced by political and foreign factors,” he explained.

He emphasized the need to distinguish between rents for different types of resources. For oil and gas, the value is determined by market prices, whereas for minerals like copper and lithium, Serbia has set a flat five percent rent without a clear methodology. “There is no stock market price for raw minerals, only for processed ones. This approach undermines the value of these resources and harms the interests of the countries that own them,” Drašković said.

Drašković also pointed out that the European Union does not have a unified rent policy, except in some countries, to avoid leaving resources to foreign entities. “Rents are far lower than the value of non-renewable resources. Once these resources are depleted, no amount of rent will compensate for their loss,” he said.

He criticized past and current Serbian governments for allowing foreign exploitation of resources at such low rents. “By permitting foreign companies to exploit our resources at such low rates, we essentially give away significant value for nothing,” Drašković asserted, adding that Vučić’s administration is merely continuing policies from previous governments.

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Petar Đukić, a professor at the Faculty of Technology and Metallurgy, described mineral rent as an economic tool designed to capture excess income for compensating negative externalities, including environmental damage. He noted that Serbia’s mineral rent is significantly lower compared to other countries. “In Croatia, the rent is 10 percent, in Slovenia 18 percent, in Romania 12 percent, and in Russia 22 percent. Many developed countries have rates between 25 and 30 percent, while Serbia’s is only seven percent,” Đukić stated.

Đukić also criticized the preferential treatment given to Gazprom, which pays only three percent rent for its operations in Serbia, due to special agreements.

He highlighted another issue: companies often self-calculate their mineral rents, leading to discrepancies. “There have been reports that the mining rent was not paid regularly, with at least 400 to 500 million euros potentially unaccounted for,” Đukić noted.

Energy expert Miloš Zdravković argued that countries should retain control over their natural resources rather than allowing foreign exploitation. “Countries that sell their resources typically have their own companies doing the extraction. Our low mining rents are inadequate compared to the value generated,” Zdravković said.

He suggested that Serbia should focus on developing national companies to handle resource extraction and consider partnerships with capable foreign firms if necessary. “If we cannot manage it ourselves now, perhaps future generations will be able to,” he concluded.

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