The deal comes amid a global competition to secure access to lithium, a crucial material for batteries. Serbia anticipates substantial investments in its contentious mining project.

On Friday, the European Union and Serbia formalized an agreement to develop a lithium mining project and establish production chains for batteries crucial for electric vehicles.

Serbian President Aleksandar Vucic emphasized the commitment to ensuring the project's success, stating, "There will be no project without full protection, and we know it will happen because we are bringing the best experts from Europe to Serbia," prior to the signing ceremony.

The memorandum of understanding was signed by Serbia's Mining and Energy Minister, Dubravka Djedovic-Handanovic, and EU energy chief Maros Sefcovic, following a critical raw materials summit.

This agreement follows Belgrade's recent authorization for work to recommence at a controversial lithium mine.

German Chancellor Olaf Scholz, who attended the signing in Belgrade, praised the agreement, stating it would aid Europe in maintaining its independence and provide opportunities to enhance battery and electric vehicle production, which many see as crucial for meeting environmental targets. "It is important that such a decision was taken today," Scholz remarked, noting that it "increases resilience and promotes industry."

Europe has lagged behind other global leaders in securing access to lithium and other essential materials, with China leading the way through strategic industrial policies that have positioned its battery companies among the largest worldwide.

The Jadar mine is reported to hold Europe's largest lithium reserve, potentially producing up to 58,000 tons of lithium annually—enough to manufacture approximately 1.1 million electric vehicles, according to Serbian media.

The project, spearheaded by Australian mining corporation Rio Tinto, has attracted interest from car manufacturers such as Mercedes-Benz and Stellantis, who are negotiating stakes in the venture.

However, the mine has also sparked controversy among locals, who are concerned about potential water pollution and the impact on their community—a common issue with many lithium mining projects globally.

Despite these concerns, the deal is anticipated to significantly benefit Serbia, particularly in enhancing its relationship with the EU. While Belgrade holds official candidate status for EU membership, recent years have seen tensions with Brussels. The project is also expected to attract billions in foreign direct investment.