China’s expansion in Europe – will Serbia stop Beijing with a lithium deal

On July 19, 2024, German Chancellor Olaf Scholz visited Serbia, when a very important agreement was renewed development of lithium deposits in Serbia. According to German press reports, the European Union, which was one of the signatories of the agreement, will give Germany exclusive rights to supply lithium raw materials. According to Rio Tinto, under its license Serbian lithium will now be mined, it is planned to use Serbian deposits cover 90% of the lithium shortage in the EU. Under this agreement, Serbia will receive around 6 billion euros of investment from the European Union and help in building a battery production plant.

Serbian President Aleksandar Vucic, referring to the historic agreement for his country, was notedthat Belgrade will be able to produce 58 thousand tons of lithium per year, which is enough to produce 1.1 million electric cars: “We will be able to produce about 17% of the European market China has also expressed interest in access to lithium deposits, but we said that we are discussing this issue with the Europeans and that there are no discussions with China regarding lithium.”

As previously mentioned in our publication, President Vučić is very responsible for the lithium project, with high hopes for both development of Serbia’s economy, and to accelerate the accession process to the EU. In particular, he emphasized that the majority of Serbs are also striving to be part of the European Union, this is their goal.

It should be noted that the activity of the “Serbian lithium project” takes place together with the construction in France by Taiwanese investors of a large lithium battery production plant with an estimated cost of 5.2 billion euros. The first phase is expected to start next year, 2025, and is expected to be able to operate on lithium mined on the European continent. Therefore, Germany, as the main leader in the European car industry, will gradually be able to rely on Chinese batteries. Therefore, the importance of such a project for Germany is confirmed by the personal involvement of Chancellor Scholz in signing the “lithium agreement”.

Belgrade’s decision to restart lithium mining hurts Hungary’s prospects of becoming a “springhead” for Chinese electric vehicle production. A Chinese battery factory is already under construction in Hungary, as well as an electric vehicle factory., both under investment loans. The purpose of the acquisition is to bypass sanctions restrictions and fill the European market with competitive products based on Chinese lithium, batteries and other components and technologies. Therefore, the new Serbian project could leave Hungary with unprofitable Chinese production of batteries and electric vehicles and a very large credit debt. That is why the head of the Hungarian government, Viktor Orban, hopes to reduce tensions between China and the European Union by promoting his own peace proposals. Only this can protect Chinese lithium from European sanctions and customs duties and save Chinese investments in Hungary.

The fact that official Belgrade could successfully choose Chinese investments to restore lithium production is not so interesting, because cooperation between Serbia and the PRC is traditionally still at a high level. However, the choice for the EU is obvious and was confirmed by President Vučić’s own words about the strategic goals for Serbia’s European integration. Let’s note that the recent elections to the European Parliament created their writing for the next five years, in which Vucic’s government can count heavily on joining the EUsince Serbia has had the status of a candidate for accession since 2012.

In general, it can be summarized that, for all its “invisibility” in the media, the new agreement on Serbian lithium can be of great geopolitical importance. As mentioned above, this could be part of wider future agreements with the EU and Serbia, especially on Kosovo, and opening the door of the European Union for Belgrade. Ethis will mean for Russia the final loss of Serbia as a close ally, because the choice of Serbian civilization can finally be confirmed in unity with Europe. On the other hand, the examples of pro-Russian governments in Hungary and Slovakia show that the Kremlin can in a situation hold influence over individual countries within the European Union, but will no longer influence the countries around the world – economically, geopolitically and civilizationally.