Serbia’s Jadar mine: the energy transition and environmental concerns
Introduction
Following government plans to reboot the Jadar lithium mine proposed by mining giant Rio Tinto, thousands of protesters rallied in Belgrade over the past month. The mine is set to become the largest lithium mine in Europe, significantly boosting Serbia’s economy, and supplying 90% of Europe’s lithium needs. However, the project has also sparked nationwide protests with concerns over the potential impact of the mine on the local environment. With increasing global demand for critical minerals, the Jadar lithium mine highlights broader tensions around resource extraction and the energy transition. This article analyses the implications of the mine and explores the different stakeholder perspectives that pose risks to its commencement.
Background
With the European Union's (EU) increasing demand for lithium, driven by the transition to electric vehicles (EVs) and energy storage, developing a secure lithium supply chain is growing in importance. Portugal is the only EU state that mines and processes lithium, making the region and its green transition heavily dependent on external sources. In response to this vulnerability, the EU has introduced the Critical Raw Materials Act (CRMA), which aims to reduce reliance on imports by promoting domestic production and refining capabilities. The proposed Jadar lithium mine in Serbia, with estimated reserves amounting to 158 million tons, could play a pivotal role in this strategy, with plans to produce 58,000 tons of lithium annually – enough to support 17% of the continent's EV production, approximately 1.1 million cars.
If all goes to plan, mining operations could begin in 2028. According to Serbia’s mining and energy minister, the government “aims to incorporate refining processes and downstream production, such as manufacturing lithium carbonate, cathodes, and lithium-ion batteries, potentially extending to electric vehicle production”. Moreover, in June 2021, amid public opposition in the Loznica region, the government emphasised that the project would involve a full-cycle approach to maximise local economic benefits. In March, Prime Minister Ana Brnabić suggested that the country could restrict or prohibit the export of raw lithium to support domestic value chain development. However, so far the specifics of the refining processes remain unclear.
Stakeholder perspectives
EU view
Since Europe currently has virtually no domestic lithium production, the EU views the Jadar lithium mine as a crucial project to bolster its economic security and support its green energy transition. The mine is expected to produce enough lithium to meet 13% of the continent’s projected demand by 2030, reducing its reliance on imports. Germany has already expressed strong support for the project, with Chancellor Scholz emphasising the mine’s importance for Europe's economic resilience.
Serbian view
The Serbian government views the project as a significant opportunity for the country's economy and its industrial development. Its mining and energy minister has emphasized that the project would comply with EU environmental standards while delivering economic benefits, including the creation of around 20,000 jobs across the entire value chain. Furthermore, Serbia’s finance minister projects that the mine could add between €10 billion and €12 billion to Serbia's annual GDP, which was €64 billion in 2022. To maximize these benefits, Serbia plans to follow the example of countries like Zimbabwe and Namibia by imposing restrictions on lithium exports, aiming to establish a complete domestic value chain for EVs. Additionally, Serbia's bid for EU membership adds a strategic dimension to the project, potentially aligning the country more closely with the bloc's energy and economic goals.
Local population view
Massive protests against the Jadar project have erupted across Serbia since June, following a court decision that cleared the way for the government to approve the mine. Many Serbians are troubled by the lack of transparency that evolved in the granting of mining rights to a foreign company. Moreover, opponents are sceptical of Rio Tinto's involvement, citing the company’s controversial history in developing countries, such as its operations in Papua New Guinea, where environmental damage contributed to a nine-year civil war. In this light, locals fear that the mine could jeopardise vital food and water sources in the Jadar Valley. For example, environmental problems caused by tailings, mine wastewater, noise, air pollution, and light pollution could endanger the lives of numerous communities and harm their agricultural land, livestock, and assets. Concerns have also been heightened by reports that exploratory wells drilled by Rio Tinto brought water to the surface that killed surrounding crops and polluted the river.
Rio Tinto view
Rio Tinto asserts that the Jadar mine is “the most studied lithium project in Europe,” having invested over $600 million in research and development to ensure its safety. As part of its efforts to gain public support, the company has conducted 150 information sessions for the local community, while Serbia's mining ministry has established a call centre to address concerns about the project. To further reassure the public, Rio Tinto has also expressed a willingness to allow independent experts to conduct an environmental review, aiming to alleviate doubts about the mine's potential impact on the ecosystem.
Conclusion
Despite the public opposition, the Jadar lithium mine appears likely to proceed, backed by strong support from the Serbian government and the EU, both eager to meet the onshoring requirements outlined in the CRMA. However, as this article has highlighted, the project faces considerable risks, including environmental challenges and persistent social and political opposition. The recent closure of the Cobre copper mine in Panama, following widespread protests over environmental damage and disputes over a new tax deal, serves as a stark reminder of the potential pitfalls. The Jadar project will need to navigate these complexities carefully to avoid similar outcomes and ensure a balanced approach to economic development and environmental preservation.
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Following Europe’s recent scramble for Africa’s natural gas resources due to the Russian invasion of Ukraine, Europe is now increasingly investing in the development of green hydrogen projects on the continent. Given Africa’s significant renewable energy potential, driven by its substantial solar photovoltaic power potential, the continent is well equipped to develop large-scale green hydrogen projects to supply European demand. Whilst there may be significant economic pay-offs for African countries exporting hydrogen to Europe, with an estimated €1 trillion green hydrogen potential, there are also many risks in the development of the nascent industry which may inhibit long-term growth.
Source: International Renewable Energy Agency
European hydrogen plans
Hydrogen has become a key part of Europe’s decarbonisation plans in its net-zero goals. Despite currently accounting for less than 2% of Europe’s energy consumption, the EU is aiming to ramp up production over the next decade. With the introduction of the REPowerEU plan in May 2022, the European Commission (EC) clearly stated its intention to utilise renewable hydrogen as an important energy carrier in its attempt to reduce its reliance upon Russia's fossil fuel imports. The EU plans to produce 10 million tonnes and import 10 million tonnes of renewable hydrogen by 2030.
The EU has planned to secure strategic partnerships with developing African nations such as Namibia and Egypt to ensure that they have a secure supply of renewable hydrogen. The incentives built into the EU regulations, enticing African nations to develop green hydrogen export facilities to Europe, could come at the expense of local populations. The energy poverty of many African nations, particularly in sub-Saharan Africa, has led many to argue that their domestic energy needs should be prioritised over helping the EU deliver its climate strategy.
The EU and individual European nations have already begun making huge commitments to green hydrogen in Africa, including provisions for exports from the continent to serve Europe’s domestic needs. The recent signing of a $34 billion agreement for a giant green hydrogen project in Mauritania is just one of those developments. Similarly, some European nations are working on hydrogen pipeline projects in Africa to meet their climate targets and to provide more secure energy supplies in future. Such projects include the “SoutH2 Corridor” pipeline project connecting North Africa with Italy, Austria, and Germany. The energy ministries in the respective countries have all signed a joint letter of political support for developing the 3,300-kilometre-long hydrogen pipeline corridor.
Source: Offshore Energy
Risk to African nations
Economic feasibility
Whilst many European nations emphasise Africa’s huge renewable energy to create green hydrogen, there are also significant economic risks that remain in its development. According to a study by the European Investment Bank, International Solar Alliance and the African Union, large-scale green hydrogen generation can enable African nations to supply 25 million tons of green hydrogen to global energy markets, equal to 15% of the current amount of gas used in the EU. The study also reported that green hydrogen is economically viable at €2/kg, due to the abundant availability of solar energy, enabling the possibility of low-carbon economic growth across the continent and reducing emissions by 40%. With more than 52 green hydrogen projects in Africa having been already announced, and production set to reach 7.2 million tonnes by the end of 2035, African nations look set to have massive increases in GDP, whilst also benefitting from the many new permanent and skilled jobs generated across the continent.
However, policymakers must be cautious to fully weigh up the economic feasibility of such projects. Limited transportation infrastructure makes transporting hydrogen which costly and hardly economically competitive. Even maritime shipping, the most cost-effective method for distances over 3,000km, would cost an estimated additional$1 to $2.75/kg. For shorter distances, the cost of pipeline transport could be significantly lower, estimated at$0.18/kg per 1,000km for new hydrogen pipelines and $0.08/kg for retrofitted gas pipelines. Given its economic competitiveness, hydrogen pipelines are the preferred choice of transportation for European nations, with the EU set to provide huge subsidies for a proposed hydrogen pipeline, named the“South Corridor”, stretching from North Africa to Bavaria. Nevertheless, as the green hydrogen industry is at a very early stage of development, it is very difficult to predict how the market will grow in the long term and accurately predict the economic payoffs of hydrogen pipelines for African nations. The demand for hydrogen could vary from150 to 500 million metric tonnes/year by 2050 due to the level of worldwide climate goals, specific actions taken within various sectors, efforts to enhance energy efficiency, direct electrification, and the adoption of carbon capture technologies. Therefore, if the European market does not develop at the speed and scale expected, African nations investing in green hydrogen will be left with huge debts to be paid for by their populations.
Source: IEA
2. Energy poverty
The potential development of green hydrogen exports to Europe should also not overshadow Africa’s broader energy landscape. At present, 600 million people, primarily located in sub-Saharan Africa and equivalent to 43% of the total African population, lack access to electricity. Sub-Saharan Africa (excluding South Africa) consumes approximately 180 kWh of energy per capita, compared to 13,000 kWh per capita in the U.S. and 6,500 kWh in Europe. Renewables also remain in their infancy in Africa, with approximately 180 TWh of renewable power generated in Africa in 2018, equivalent to approximately less than 0.02% of its estimated potential. African nations must be cautious to ensure that they choose the correct trade-off between utilising hydrogen for exports to Europe and their own domestic needs. Should African nations divert their resources toward hydrogen production for exports, some fear that green hydrogen may become another “neo-colonial resource grab” and starve African nations of their resources.
Therefore, African nations must ensure that all the benefits of green hydrogen exports are not extracted for European gain. The agreements between the EU and African nations such as Egypt, Morocco and Namibia already show worrying signs of resource exploitation. Despite these deals being presented as a win-win scenario, the rules allow hydrogen projects to “cannibalise” the local infrastructure for exports. Namibia is a prime example as it is racing to become Africa’s first green hydrogen exporting hub despite only 56% of its citizens having access to electricity in 2022 and relying upon imports to meet its electricity demand. The Namibian government hopes to develop 10 hydrogen export projects with European nations. However, there are concerns over potential misuse of climate finance, which should focus on aiding local development, rather than export projects.
Outlook
With increasing interest and investment from European nations into green hydrogen projects in Africa, countries on the continent must remain cautious of the huge benefits promised by their European counterparts. Despite the continent's unparalleled potential for producing low-cost green hydrogen in the future, producing green hydrogen at economically competitive prices remains elusive given the high costs of production and transportation. However, should these costs be brought down by increased European investment, African nations may well prioritise meeting their own domestic energy demands and accelerating domestic renewable energy deployment before considering exporting green hydrogen to Europe in large-scale quantities.
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