Wednesday, January 19

The world wants more lithium but does not want more mines


Prices for lithium, the basic component of electric vehicle batteries, soared to a record this year, amplifying concerns that there won’t be enough metal to drive the shift away from combustion engines. In that climate, now should be the best time to build a mine.

Rio Tinto Group is discovering the opposite. Within months of unveiling plans for a $ 2.4 billion mine in western Serbia, local opponents organized a movement that shook the government and paralyzed cities as thousands of protesters marched through the streets. The authorities subsequently suspended a land use plan for the proposed mine, although they did not reject the project entirely.

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“The whole Jadar project is just another way that multinational companies, with the help of our state, can make a profit and cause harm to the people of Serbia,” said Slavisa Miletic, an activist who lives near the planned mine.

The opposition Rio faces is being replicated around the world, and industry executives see it as their biggest challenge going forward. Southern Copper Corp. is fighting to win government support for a controversial $ 1.4 billion project in Peru, and Lithium Americas Corp. was taken to a US federal court for its planned mine in Nevada.

Historically, mining provided employment and economic development to typically poor areas, with taxes and royalties to fill government coffers. But too often, people living nearby paid a price for environmental degradation and the occasional catastrophe.

That is changing. The locals are backing down, deciding that the economic benefits do not outweigh the costs to their quality of life. Governments are also increasingly reluctant or unable to ignore these concerns.

“Today it is more difficult to build a mine than before,” said Ben Davis, a mining analyst at Liberum. “It is much easier to organize the opposition, often in rural and isolated communities.”

To placate critics, the Serbian government offered a referendum on the mine, but that in itself became controversial, with the opposition saying recent legal revisions tipped the balance in favor of the government and Rio.

The protesters also criticized an effort to speed up ownership changes for both state and private projects. Outrage forced President Aleksandar Vucic to send the proposal to parliament for reworking.

“Environmental problems were neglected for a long time in Serbia because the economy and living standards dominated for years,” said Bojan Klacar, director of the Belgrade-based Center for Free Elections and Democracy, or CESID. “The priorities have changed.”

A few thousand Serbs protested for the fourth weekend in various cities, demanding an unconditional ban on lithium exploration and extraction by any company, not just Rio Tinto. At the largest demonstration, in the capital Belgrade, activists promised to intensify their protests if their demands are not met by next month.

When Rio, the world’s second-largest miner, announced the project in July, it seemed like a failure to new CEO Jakob Stausholm.

Lithium is a forward-looking commodity critical to global decarbonization. The largest automakers, from Tesla Inc. to Volkswagen AG to Toyota Motor Corp., need an ever-increasing supply of battery materials to accelerate the launch of electric vehicles, and BloombergNEF expects demand for packaged minerals from lithium ion will grow five times by 2030.

A global lithium price index has more than tripled this year, and BNEF forecasts that lithium-ion battery prices will rise next year for the first time since 2010.

Furthermore, the mine would be built on farmland, not virgin forests, and would be only a 10-hour drive from the epicenter of car manufacturing in Germany. The project, which Rio says could create more than 2,000 jobs, is scheduled to open in 2026 and reach full production in 2029.

However, that long list of supposed benefits does not matter to many. Mining’s dark past includes a plethora of deadly disasters, from cyanide leaks to dam collapses.

Last year, Rio’s CEO was forced to resign after the company destroyed an ancient Aboriginal site in the Juukan Gorge in Australia.

“We have a track record of things in our organization that we are not proud of, and Juukan is number one on that list,” said Sinead Kaufman, head of the Rio unit that plans to build the Serbian mine.

And it’s not just lithium that is becoming problematic. Copper is an essential metal for the energy transition, and demand is expected to grow almost 50% in the next decade, according to Chilean miner Antofagasta Plc. Mines typically take about 15 years to go from discovery to production.

Still, many of the best prospects are in limbo. Rio’s proposed Resolution copper mine in Arizona, which could meet a quarter of US demand, is under review by the federal government following opposition from the San Carlos Apache tribe, whose leader declined to meet with the director. Rio general earlier this year.

“Despite mining’s contribution to almost every aspect of modern life, the industry is still seen as taking more than it gives,” said Mark Cutifani, chief executive officer of Anglo American Plc, in a speech in East London. month.

Rio’s challenge now is to convince the Serbs that the Jadar mine will not be like the mines of yesteryear. The company says it will be built to the highest standards, reuse almost all of its water, and use electric trucks.

“A mine that will be built in the 2020s, that will exist for decades, will look very different than something built 50 years ago, or even 20 years ago,” said Kaufman of Rio. “That is the message we need to get across.”

© 2021 Bloomberg


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