Rio Tinto Shares Slump As Serbia Scraps Its $2.4B Lithium Project

Shares in Rio Tinto tumbled on Friday, Jan. 21, 2022, after Serbia revoked its lithium exploration licenses over environmental concerns, hurting the Anglo-Australian miner's ambition to become Europe's largest supplier of the metal used in electric vehicles, Sonali Paul and Praveen Menon reported for Reuters.

Photo Insert: For now, it looks like Rio Tinto will have to forego its ambition of becoming a major player in lithium and stick to its other bread and butter, copper, being one of them.

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 over 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 0855 GMT(4:55 p.m. in Manila), 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.

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