Scholz to ink lithium extraction deal with Serbia in bid to diversify EU’s resource supply

Lithium from southeastern European country Serbia could bolster Germany's ambitions for establishing a domestic battery production industry. German chancellor Olaf Scholz plans to visit Serbia’s president Aleksandar Vucic on Friday (19 July) to ink a deal on trading the raw material that is regarded as a crucial ingredient for the global shift towards electric mobility, government spokesman Steffen Hebestreit told journalists in Berlin. Scholz will be accompanied by Maros Sefcovic, vice president of the European Commission, after Serbia’s government earlier this week gave the green light to exploiting reserves in Europe’s largest lithium mine near the town of Loznica at the border with Bosnia-Herzegovina in the west of the Balkan country. 

Local activists for years had protested against the mine out of fears it could pollute water reserves in the region, which had prompted the withdrawal of an existing mining license in 2022, news station n-tv reported. The European Commission intends to sign a memorandum of understanding with Serbia’s government on a strategic partnership for the sustainable extraction of resources and for building up a battery production chain in the country. A letter of intent is planned between Serbia and car companies Daimler and Stellantis, as well as British-Australian mining company Rio Tinto and German state-owned development bank KfW.

“This is about developing Europe’s raw material agenda and the diversification of resource suppliers,” which would come with “a commitment to high environmental and sustainability standards,” Hebestreit said. He argued that Serbia had revised its standards to pave the way towards large-scale extraction at the Loznica mine, stressing that “this is not a government project, but one carried by companies.” Asked whether Serbia had put the protests against the mine that has also been eyed by China’s government to rest, Hebestreit said “we will have to wait” and see how public opinion in Serbia on the project develops.

Serbia is a candidate for membership of the European Union but its government under Aleksandar Vucic has in the past years faced international criticism over its handling of public dissent and attempts to influence press freedom in the country. Moreover, Vucic has repeatedly styled itself as an ally to Russia’s president Vladimir Putin, also after Russia’s invasion of Ukraine. Europe’s automotive industry is looking to diversify its supply of the mineral that is crucial to current battery technology. Currently, south American countries and Australia are the main source countries of the raw material and China is the leading exporter of processed lithium. Lithium reserves are also found in other parts of Europe, including in Germany, but usually in smaller quantities, which make commercially viable extraction a challenge.