News: RIO Rio Tinto shares slide as Serbia pulls plug on $2.4 bln lithium project

Jan 21 (Reuters) - Shares in Rio Tinto (RIO) RIO.L fell on Friday after Serbia revoked lithium exploration licences of the Anglo-Australian mining giant, bowing to local protesters who opposed the development of the project on environmental grounds.

Rio's shares were down as much as 2.8% to A$110.27 in the Australian stock market, its worst intra-day drop since Oct. 19, 2021.

Serbian Prime Minister Ana Brnabic said in a news conference in Belgrade that the government's decision came after requests by various green groups to halt the $2.4 billion Jadar lithium project. If completed, the project would have helped make Rio one of the world's 10 biggest producers of the material, a key ingredient in batteries and much in demand in the ongoing electric vehicle boom.

Rio said it was "extremely concerned" by Serbia's decision and was reviewing the legal basis for it.

The move also comes as Serbia approaches a general election in April, and as relations between Belgrade and Canberra have soured after Sunday's high-profile deportation of tennis star Novak Djokovic from Australia https://www.reuters.com/lifestyle/sports/detained-djokovic-fight-australian-deportation-court-2022-01-14 over the latter's COVID-19 entry rules.

"The level of opposition to it (Jadar) has really ratcheted up over the last six months," said Credit Suisse analyst Saul Kavonic.

"We've been highlighting for a while now there would be about $2 a share at risk if the (Serbian) government cancels it," Kavonic said.

Thousands of people blocked roads https://www.reuters.com/markets/commodities/town-western-serbia-scraps-plan-lithium-mine-project-2021-12-16 last year in 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.

Earlier this week, Rio had pushed back the timeline for first production from Jadar by one year to 2027, citing delays in key approvals.

"This highlights that there will be an even greater shortage of lithium and other critical and battery materials," said Sam Brodovcky, Standard Chartered's head of global metals and mining M&A.

"There aren't that many projects like Jadar, and the Western world is not going to have its own supply chain if these are not developed. There's a disconnect between saying, 'We want to compete with China in building our own supply chains,' if you don't do the projects," Brodovcky said. (([email protected]; +6448028163; Reuters Messaging: [email protected]; Twitter: https://twitter.com/Journopraveen))