The Australian Financial Review (AFR) reports that four years ago, the largest Chinese battery manufacturer, Contemporary Amperex Technology Co. Limited (CATL), was willing to pay one billion dollars for a 50% stake in Rio Tinto’s Jadar lithium project in Serbia. However, Rio Tinto rejected this offer, and recent insider information suggests that the project’s internal models now indicate a negative net present value.
Sources close to the situation express regret that CATL was not involved, suggesting that the project might have fared better. This development comes as Rio Tinto has announced a $9.9 billion acquisition of Arcadium Lithium, a producer focused primarily on groundwater extraction in Argentina, which some view as an admission of failure in Serbia.
Rio Tinto’s difficulties in Serbia began in January 2022 when then-Prime Minister Ana Brnabić revoked all permits for the Jadar project, a significant setback following the company’s prior approval for construction. This decision was largely influenced by strong public opposition to the project. Additionally, some insiders believe that the Australian government’s deportation of Serbian tennis star Novak Djokovic contributed to a hostile political climate for the Anglo-Australian miner.
Since the permit cancellation, Rio Tinto has faced continuous public protests, including demonstrations featuring notable figures like actress Bojana Novaković. The U.S. ambassador to Serbia has even pointed to Russian influence in fueling local opposition.
Despite potential public support, Rio Tinto insiders remain skeptical about the project’s viability due to challenging geological conditions. The lithium and borate resources in the region are situated in weak geology, making underground operations costly. Moreover, the minerals are found in jadarite, a substance previously unknown until its discovery by Rio Tinto in 2004.
In contrast, Argentina’s new government, led by President Javier Milei, has garnered praise for its “RIGI” policy, offering tax breaks of up to 30 years for major mining projects, which some view as a more favorable environment for investment. With this context, experts speculate that Serbian officials, including Miloš Vučević, may need to reconsider their approach to attract investment in lithium mining.
