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Serbia’s lithium reserves: Shifting geopolitical dynamics amid US-China trade rivalry

The intensifying trade conflict between the United States and China over lithium resources, critical for the burgeoning electric vehicle industry worldwide, has thrust Serbia into a pivotal role. Blessed with Europe’s largest lithium reserves, Serbia stands to gain immensely from this clash of titans, potentially transforming its economy into a $6.5 billion lithium powerhouse annually. Companies like Tesla, Google and Apple are already eyeing Serbia’s lithium bounty, underscoring the geopolitical significance of this resource.

During a recent visit to Belgrade, Chinese President Xi Jinping actively pursued access to Serbia’s lithium reserves, seeking to bolster China’s dominance in the electric vehicle market. Serbian President Aleksander Vucic, adept at balancing relations with both China and the U.S., is strategically leveraging this rivalry to Serbia’s advantage. However, this delicate diplomatic dance raises questions about Serbia’s long-term geopolitical alignment.

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Serbia’s lithium deposits, estimated at 118 million tons of lithium oxide, hold immense value for electric battery production. Vucic views lithium as a potential economic lifeline for Serbia, particularly with Europe’s largest lithium reserves situated in the Western Serbian region of Macva. Notably, Rio Tinto, the Australian mining giant, holds a significant stake in Macva.

A recent meeting between Vucic and Xi in Belgrade underscored China’s keen interest in Serbia’s lithium reserves. Discussions ranged from economic cooperation to China’s investments in space technology and arms sales to Serbia, with lithium featuring prominently in their talks.

The Biden administration’s response to China’s growing influence has been swift, with the imposition of new tariffs on Chinese electric cars, solar panels, and steel. These measures aim to safeguard U.S. jobs and industries and curb China’s unfair trade practices. The escalating trade tensions highlight the strategic importance of lithium in the global economy and its potential implications for national security.

China’s burgeoning electric vehicle market, led by companies like BYD, poses a significant challenge to U.S. dominance. BYD’s low-cost electric vehicles, powered by advanced lithium iron phosphate batteries, are gaining traction globally. China’s control over lithium resources could further bolster its position in the electric vehicle market, posing a threat to U.S. interests.

Beyond economic considerations, China’s strategic interests in Serbia extend to geopolitical spheres, including support for Serbia’s stance on issues like Taiwan and Kosovo. Serbia’s refusal to align with Western sanctions against Russia aligns with China’s broader goal of countering U.S. influence and expanding its geopolitical reach.

As Serbia navigates the complex web of global geopolitics, its lithium reserves emerge as a critical bargaining chip. Balancing relations with both the U.S. and China, Serbia seeks to maximize its economic gains while preserving its long-term strategic interests. However, the path forward remains uncertain, with Serbia poised to play a pivotal role in shaping the future of the global lithium trade war.

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