Why a Bosnian silver mine will help the West in metals race

Tucked away in the Bosnian mountains about an hour’s drive from the capital Sarajevo, one of the largest new mining projects in Europe is nearing completion.

The Vares silver and zinc mine, run by London-listed Adriatic Metals, will begin production this year.

It will be one of the few major sites on the continent developing metals critical to the green revolution.

Vares has received support on the ground for helping to boost the local economy. But international investors, politicians and manufacturers are advocating for it because a project like this in Europe could ease China’s stranglehold on materials needed for the green revolution, if only slightly.

Silver, whose conductivity makes it ideal for use in wind turbines, and other traditional metals such as copper will be crucial.

But so is a group of materials known as “critical” metals and minerals. These include lithium, used in batteries, rare earth metals used in magnets for electric cars, cobalt, used in particular in iPhones, and a host of others. Some industry leaders fear that China’s lead in this area poses a greater threat to the West than its technological advances or a possible invasion of Taiwan.

The world is expected to need four times as many of these critical metals as it does today to build green technologies by 2040 if it is to even come close to meeting net zero carbon targets.

The UK and the European Union have become aware of the West’s major supply shortfall and the risks of dependence on China. Both have made efforts to publish strategies outlining policies and possible funding channels.

The EU has arguably been more involved and started a strategy more than a decade ago. The UK blueprint, released last year, outlined plans to turn it into a mining power station, including investment in processing plants, opening mines and setting up plants to recycle green materials. When asked whether the UK and Europe should extract more, Peter Handley, head of the European Commission’s Critical Raw Materials Unit, replied: ‘What better place to ensure that the extraction, refining and recycling of critical raw materials is sustainable than on our own territory?

‘Due to the green and digital transitions, our need for these materials will increase enormously, and access is not at all self-evident. The economies of the future will no longer depend on oil and coal, but on lithium, silicon and rare earth metals.’

A strategy is one thing, executing it is another, says George Bennett, head of London-listed Rainbow Rare Earths, adding, “The plans are great, but they haven’t materialized yet.”

Rainbow has a mine in South Africa and the US government is effectively an investor as it backs one of Rainbow’s largest shareholders. The European Bank for Reconstruction and Development is an investor in Adriatic’s company. In the UK, much support has been provided through grants.

The deposits being evaluated in Britain include lithium in Cornwall, which could be home to huge reserves. A new mining era in the county took a step closer last week when start-up British Lithium struck a deal with a French miner. The project could employ 300 people by 2030 and produce enough lithium for 500,000 electric cars per year. A rival, Cornish Lithium, which plans to extract lithium from geothermal waters, needs to raise money to continue.

Unlike in China, opening mines in the UK or the EU can be controversial and provoke protests, and there is no guarantee that projects will be approved. But its development is “absolutely necessary” to reduce dependence on China, says Paul Cronin, CEO of Adriatic.

Jeff Townsend, head of the Critical Minerals Association, says: “China began its critical minerals strategy in the 1970s. It knows it has a diplomatic and economic weapon. At this stage, you can’t prevent China from dominating the scene, but you can prevent it from controlling it.”