Shares in mining giant Rio Tinto slumped on Friday after Serbia pulled the plug on its lithium project over environmental concerns, hurting the Anglo-Australian miner’s ambition to become Europe’s largest supplier of the metal used in electric vehicles (EVs).
The decision by Serbia comes as it approaches a general election in April, and as relations between Belgrade and Canberra have soured after Sunday’s deportation of tennis star Novak Djokovic from Australia due to its COVID-19 entry rules.
It is also a major setback for Rio, which was hoping the project would help make it one of the world’s 10 biggest producers of lithium, a key ingredient in batteries.
The mine is Rio’s only lithium project and the company announced just a month ago a deal to buy a second lithium asset for $825 million, as it looks to build its battery materials business.
Rio’s shares in Australia closed down 4.1% after falling as much as 5.1% in the Australian stock market, its worst intra-day drop since August 2021. The benchmark index ended down 2.3%.
In London, Rio’s shares were down more than 3% by 8:55 a.m. GMT, slightly underperforming their peers.
Serbian Prime Minister Ana Brnabic told a news conference in Belgrade that the decision came after requests by various green groups to halt the $2.4 billion Jadar lithium project that had planned to start production in 2027.
Thousands of people blocked roads last year in a protest against the government’s backing of the project, demanding Rio Tinto leave the country and forcing the local municipality to scrap a plan to allocate land for the facility.
The decision came days after ties between Australia and Serbia hit rock bottom as tennis star Djokovic was deported before he could play in the Australian Open.
Djokovic spoke out in support of “clean air” in a December Instagram story post captioning a picture of the anti-mining protests, which was published by digital sports platform The Bridge.
Twitter users were quick to joke about Rio being deported from Serbia.
Rio said it was “extremely concerned” by Serbia’s decision and was reviewing the legal basis for it.
The Australian government said it regrets Serbia’s decision to revoke Rio’s licenses.
“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, particularly when it comes to their expertise,” the government said in a statement to Reuters. -Agencies
