Serbia pulls plug on Rio Tinto's $2.4bn lithium project

(Sharecast News) - Shares in Rio Tinto fell in both London and Australia on Friday, after Serbia revoked the miner's lithium exploration licences.
The surprise decision, which coincides with a cooling of relations between Belgrade and Canberra over Serbian tennis player Novak Djokovic, is a major blow for the Anglo-Australian miner. It is seeking to become Europe's largest supply of the metal, a key ingredient in the batteries used in electric vehicles.

It first discovered lithium reserves in the country's Loznica region in 2004. But the $2.4bn Jadar project has long been controversial, with thousands of Serbians protesting last year against both the project and the government's support of it.

In a televised address announcing the decision, Serbia's prime minister Ana Brnabic acknowledged the protests: "We have fulfilled all the demands from the environmental protests and have put an end to Rio Tino in the Republic of Serbia," she said.

"Everything about the Jadar project is finished."

Earlier this month, Djokovic - a national hero in Serbia - was deported from Australia and barred from playing in the Australian Open in a dispute over Covid-19 entry rules. Djokovic has also shown his support of environmental issues on social media.

The announcement also comes just ahead of the country's next general election, in April.

As at 1015 GMT, share in the blue chip were down 2% in London at 5,456.82, having earlier touch 5,406p. They closed 4% lower in Australia.

Rio Tinto - which is understood to have already spent around $450m on feasibility studies relating to the project - said it was "extremely concerned", and that it was reviewing the legal basis of the decision. The project was due to start production in 2027.

The Australian government told Reuters it regretted the move, adding: "We note the strong economic benefits of the significant investment by Rio Tinto in Serbia. Australian resources companies have an outstanding reputation around the world."