According to Bloomberg and the Financial Times, Serbian President Aleksandar Vučić stated in an interview with German media Handelsblatt that Serbia has pledged not to sell lithium to Chinese automakers. Instead, Serbia promises to prioritize European car manufacturers such as Mercedes-Benz, Volkswagen, and Stellantis when developing one of the world's largest lithium deposits.
Aleksandar Vučić announced on the evening of July 17 that Serbia would sign a framework agreement on mineral raw materials with the European Union on July 19 local time. Vučić highlighted that the preliminary agreement includes establishing processing industries and battery manufacturing. This will ensure the production of raw materials and electric vehicles that meet EU sales conditions without being subject to taxation.
According to insiders, Mercedes-Benz and Stellantis are already partners in a battery joint venture. They are willing to follow up on Rio Tinto Group's $2.4 billion Jadar lithium project in Serbia by optimizing the processing and increasing electric vehicle battery production.
Mercedes-Benz and Stellantis are in negotiations with the Serbian government regarding investments in lithium processing and electric vehicle battery production. Executives from both automakers will arrive in Serbia on July 19, coinciding with a visit from German Chancellor Olaf Scholz. Rio Tinto Group executives are also expected to attend. Insiders revealed that they might sign a letter of intent to develop Serbia's lithium industry.
These discussions mark a significant step in restarting Rio Tinto Group's Jadar lithium project, which was halted by the Serbian government two years ago due to large-scale protests that paralyzed cities nationwide.
In response to the reports, spokespeople for Mercedes-Benz and Stellantis declined to comment.
Vučić stated that Serbia would produce 58,000 tons of lithium annually, accounting for 17% of the EU's lithium demand, sufficient to meet the needs of 1.1 million electric vehicles. This would significantly boost the European electric vehicle industry.
Establishing a broader lithium industry, rather than just exporting raw materials, has always been a key requirement for the Serbian government's support of the Jadar project.
If approved, this lithium mining project will significantly boost both Rio Tinto Group and Serbia's economy. More importantly, it will secure the raw materials needed for Europe's energy transition.
Currently, the EU's battery raw materials production is entirely dependent on imports. To reduce reliance on Asian imports, the EU has been striving to develop its electric vehicle supply chain. However, due to the slow transition to electric vehicles, several battery manufacturing projects have been shelved.
For instance, Mercedes-Benz and Stellantis plan to spend €7 billion (approximately $7.7 billion) to build three joint battery plants in Europe. However, due to lower-than-expected car demand, the construction of two of these plants has been suspended. Even if Europe sees the rise of battery industry giants in the future, the industry will still depend on a raw materials and processing supply chain dominated by China.
