Rio Tinto mothballs controversial $3.7b Jadar lithium project in Serbia as part of cost purge

Rio Tinto’s cost-conscious chief executive, Simon Trott, has put an end to a $US2.6 billion ($3.7b) mining development in Europe that caused significant controversy.

An internal memo, sent this week to select Rio staff, stated the Jadar lithium project in Serbia would be placed into “care and maintenance.”

“Given the lack of progress in permitting, we are not in a position to sustain the same level of spend and resource allocation,” it read.

Jadar is endowed with a large, high-grade lithium resource, but its was fiercely opposed by the majority of Serbia’s populace — who were worried the mine would destroy prime agricultural land.

Following massive protests organised by environmental campaigners, the Serbian government in January 2022 revoked Rio’s permit for the multi-billion-dollar project.

Then, the Serbian Constitutional Court in 2024 ruled that the 2022 decision was unconstitutional.

The mega mine was slated for first production in 2026, which was then pushed back to 2028.

Jadar being mothballed will come as little surprise to most in the market.

Mr Trott’s predecessor Jakob Stausholm was a lithium bull, earmarking more than $15 billion to build up the mining giant’s lithium division at a time of weak prices for the battery commodity.

Deutsche Bank analyst Liam Fitzpatrick in July said Rio’s board had lost patience with Mr Stausholm’s counter-cyclical lithium bet and may want Mr Trott to start cutting some losses.

He based this assessment on comments made by Rio’s chairman Dominic Barton that month.

“The tone on lithium was interesting and suggests the company is aware of concerns over low returns and over investment,” Mr Fitzpatrick said.

“Barton stated that the company does not want to invest too aggressively with a focus on picking the best opportunities and capital discipline.”

Mr Trott, who was directly in charge of Jadar’s development last decade, said in October that Rio would only progress “the very best” of its numerous lithium options.

“One of the really good things about having options, and we’ve got lots of options in the lithium space, is that the bar is really high, and so we can look at those projects and progress the very best of them,” he said.

Mr Trott has been on a cost-cutting spree since ascending to Rio’s top job three months ago.

Rio’s Australia chief executive Kellie Parker and Brisbane-based minerals division chief executive Sinead Kaufman were made redundant and the two roles permanently extinguished on August 27 — just two days after Mr Trott officially started as chief.

Mr Trott last month then said Rio needs to “have a hard look” at reducing the number of “layers” it has and is progressing plans to improve cost efficiency.

“Part of that (plan) is looking inside the organisation . . . we often talk about some of the differences being driven by standards. You’ve got to really drill into your standards. Who signs off on the standards, how they then relate, because we’ve tended to build this stuff up over time,” he said.

“And we’ve got to have a hard look at that. Part of that is also around how you’re structured as an organisation.

“If you reduce the number of small teams, you reduce the number of layers, you can speed up some of that decision making and really drive those projects at full throttle.”