Mining & Energy D I P L OM AC Y
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2022
P R E S E N T S
MINING & ENERGY
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Focus on Energy Efficiency and Green Energy Investing in boosting energy efficiency and developing renewable energy sources must be a priority if we want Serbia to have a safe energy supply and be energy independent in the coming decades
erbia has been diligently working on implementing the Green Agenda. In her interview, Professor Zorana Mihajlović, PhD, Deputy Prime Minister of the Republic of Serbia and Minister of Mining and Energy, talks about energy security, renewable energy sources (RES), energy efficiency in Serbia and diversification of energy-supply routes.
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In Prague, you stated that energy security and independence are priorities for all countries. How is Serbia standing on this issue? — Energy security is currently the number one topic in the world, as a lack of energy security leads to lax national security and hinders economic development. This is especially visible in crises, which bring to the forefront all existing weaknesses and issues that have been pushed under the carpet, so to speak. It is a great pity that energy was managed by the ministry that was ‘dormant’ in previous years and that many of these things were not initiated much earlier. If that happened, today we would have a different situation relating to the diversification of natural gas supply and the power grid. The Niš-Dimitrovgrad gas pipeline project has been talked about for the past 10 years, and it should have been built even before the current Ministry was formed. And yet, the work on this pipeline, started this year. Also, no new power plants have been built in Ser-
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bia for over 30 years, and in previous years. The construction should have been much faster and a lot more should have been invested in the overhaul. Results don’t appear out of nowhere but come from hard work, effort and dedication. This is how the previous ministry has been working and thanks to that, after almost 30 years, Corridor 10 was finally completed, the Miloš Veliki motorway was built and commissioned and the Belgrade-Budapest high-speed railway project was launched. Also, we now have three international airports in Serbia. I believe that similar results can be achieved in the energy sector too because we have already laid the foundation for a completely different energy sector in the past year and a half, thanks to a new legislative framework, a new investment plan and the fact that we started drafting strategic documents.
Has Serbia already taken the first steps by creating a new legislative framework last year, especially when it comes to the use of RES and energy efficiency? — During this Ministry’s term, the authorities have passed a set of new, contemporary laws regulating the energy sector, including the first special Law on the Use of Renewable Energy Sources, a new Law on Energy Efficiency and Rational Use of Energy, and amendments to the Energy Law. Based on these changes, Serbia has been actively involved
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Professor ZORANA MIHAJLOVIĆ, PhD Deputy Prime Minister of the Republic of Serbia and Minister of Mining and Energy
Serbia has been actively involved in the green energy transition, not only as a state but also through citizen participation
in the green energy transition, not only as a state but also through citizen participation. A national programme to increase energy efficiency in households has been launched too, where together with local governments, we have provided financial support to people who wish to replace doors and windows in their houses, improve insulation, and replace boilers with more energy-efficient ones. The option of buyer-producer is also stipulated in the new Law on the Use of Renewable Energy Resources, whereby individuals can produce electricity for their own needs by installing solar panels, with the help of subsidies, and through joint action with towns and municipalities. Investing in boosting energy efficiency and developing renewable energy sources must be a priority if we want Serbia to have a safe energy supply and be energy independent in the coming decades. Under the auspices of the energy transition, our task is to provide a different structure of the energy mix, which will ensure that we have enough energy for development and a healthy environment. We will be embarking on a gradual
exit from so-called dirty technologies in the next few decades, and at the same time, we are going to build new energy capacities much faster, primarily reversible hydropower plants and RES, while providing enough base energy for the stability of the power system.
er suppliers. With the completion of the new gas pipeline next year, we will be able to get the gas from the Caspian region to Serbia and gas from the LPG terminal in Alexandroupolis, as well as gas from the future sources, such as the East Med pipeline.
How far have we come in the process of drafting an integrated climate and energy plan and new energy development strategies? — For the first time, one document - the Integrated Climate and Energy Plan – contains goals that include increasing energy efficiency, increasing the share of RES in total energy produced and reducing greenhouse gas emissions. With this document, which will be harmonized with the new energy development strategy, we will adjust our goals to the relevant UN conventions and EU and Energy Community policies, and be part of global efforts in the fight against climate change. But more importantly, we are pledging to present and future generations that we will do everything that is required for Serbia to be a country that has enough energy for its citizens and businesses while preserving and improving the environment. On the back of a number of proposed scenarios, the working group that is engaged in writing this document has so far come up with six working scenarios that do not include nuclear energy, five working scenarios with nuclear energy and one scenario that has goals equal to those in the EU. The Group has also analyzed how to ensure our energy security, primarily through greater participation of RES in energy production. We will put these scenarios up for a public discussion to hear the proposals and suggestions from everyone – the business sector, universities, civil society and citizens.
What is the current situation in Serbia in terms of energy stability? — Serbia has sufficient quantities of electricity, heat, gas and other energy sources to supply the domestic market. On the one hand, we have ensured a secure and stable supply, and on the other, measures have been implemented to mitigate the consequences of rising global prices on both our com-
The diversification of both supply routes and suppliers has been initiated in the gas sector. What benefits will Serbia gain because of that? — Only a year and a half ago, Serbia got gas from only one direction, that is Hungary, which made our country extremely vulnerable in case of any disturbances. Today, we have the Balkan Stream gas pipeline, which ensures a diverse gas supply, and we have started the construction of a new Niš-Dimitrovgrad gas interconnection, which will enable the country to receive gas from oth-
panies and citizens. The energy crisis is a global one and we don’t have a great influence on it. What we can do and are working on is to expedite investments in new capacities, primarily in the power industry and to prepare for all options. In the cases where we are import-dependent, we need to work on increasing gas, crude oil and crude oil derivatives reserves, to be ready to deal with possible disruptions.
Which country in the world is currently a world leader in energy diversification and a role model? — Serbia became more actively involved in the energy transition pro-
cess last year. Although it is not a good thing that we have started this process later than we should have, it allows us to use the experiences of all those countries which are ahead of us in this process. In addition to exchanging experiences with everyone from whom we can learn something, we need to be open to every country that is interested in cooperation in project implementation, and this is always one of the topics in meetings with ministers from other countries.
What are the current prospects for solving problems in Europe and the world, in the light of the Ukrainian crisis? — It is certain that after the crisis in Ukraine subsidies, nothing will be the same in Europe and the world, and that there will be consequences for both political relations and the economy. We have managed to preserve energy stability throughout this crisis, but we must reckon with the fact that there will still be challenges and that we must be ready for them. This means that we must be much more efficient, especially in investments, but also in introducing changes that are necessary for the functioning of our energy system. In crises, you pay a high price for everything that you have not done on time, and energy is the most expensive when you don’t have enough of it.
Measures have been implemented to mitigate the consequences of rising global prices on both our companies and citizens
What are regional relations like at the moment and what are further plans for energy diversification in the Balkans? — In addition to the ongoing construction of the Niš-Dimitrovgrad gas pipeline, our goal is to link with gas interconnections in Romania, Bosnia and Herzegovina, Montenegro, Croatia and North Macedonia, as well as to work on increasing our country’s natural gas storage capacity. With the increase of obligatory reserves of crude oil derivatives, where we have already achieved significant progress, in this way, Serbia would substantially increase its own energy security, but also contribute to greater security of supply in the region. Furthermore, it is important to establish various mechanisms in the region to coordinate actions in the event of supply disruptions, including crisis planning. Regional connectivity is key to increasing our energy security, as well as fortifying our resilience to external shocks that we must count on if we want to be ready for them if they happen.
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Energy Stability and Challenges Caused by the Global Crisis
Today, during the global energy crisis caused by the war in Ukraine and the problems with the delivery of Russian gas, coal has regained its importance, even in countries where coal-fired thermal power plants have been shut down COM M E N T
t is a well-known fact that the energy potential of our country depends on the exploitation and combustion of low-calorie coal that is mined in Kolubara and Kostolac, and that we get over 70% of electricity from our thermal capacities. In recent years, there has been a major campaign against coal as an energy source in favour of renewable energy sources. Such a campaign originates in the European Union, and the goal is to completely replace coal with other environmentally friendly sources. Numerous prerequisites have been put in front of Serbia, which is on the path to the EU accession. The fact is, however, that we do not have a suitable alternative in renewable sources, or not to an adequate extent that we can completely give up coal. The situation is such that Serbia's energy stability will depend on the exploitation of our lignite for a long time to come, which of course does not mean that the share of renewable sources should not increase year on year. Special emphasis should be placed on the fact that today, during the global energy crisis caused by the war in Ukraine and the problems with the delivery of Russian gas, coal has regained its importance, even in countries where coal-fired thermal power plants have been shut down. As a mining engineer, I will write about the raw material base and the problems in the exploitation of
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Dr MILINKO RADOSAVLJEVIĆ Mining engineer, Director of the Mining Institute
In the distant future, the exploitation of oil shale should also be considered, which can be a significant resource for the production of electricity and oil
coal, on which the efficiency of the thermal energy capacities in Serbia depends. What is the quality of coal that is mined in surface mines in Serbia and what can we expect in the long run? All our surface mines in the Kolubara and Kostolac basins share the same predicament the quality of coal is declining, but other parameters also vary, such as the increasing share of tailings, combustible sulfur content, ash content, etc. For example, in the case of the Tamnava Zapadno Polje surface mine, it's been projected that the average coal quality has a declining trend, so at the end of exploitation, the average ash content over 18.5% and calorific value (LCV-lower heating value) around and below 7 GJ/t are expected. The same applies to coal from PK Radljevo, where the average ash content is expected to increase to over 17.7% and the LCV to fall below 7 GJ/t in coal. All these facts inevitably impose the need for coal treatment before combustion in thermal power plants. In addition to intervening in the technology of surface exploitation, in terms of selective excavation, the application of coal homogenization is also required. Furthermore, there is a growing need for coal purification to improve the quality of coal delivered to thermal power plants. One of the important questions to consider is whether the quantities of coal that we are currently exploiting are sufficient to supply our ther-
mal power plants, especially when we take into account that the construction of the Kostolac B3 Thermal Power Plant with a capacity of 350 MW is underway. All these thermal energy capacities are planned based on lignite exploitation in the two aforementioned coal basins. Unfortunately, we are already facing insufficient quantities of quality coal, and even import is being considered. As for the alternative to the existing surface exploitation of lignite from the Kolubara and Kostolac coal basins, significant exploitation reserves of lignite have been determined in the Kovin basin, close to 200 million tonnes, so this deposit will probably be interesting to consider in the future. As far as underground coal mining is concerned, brown coal is interesting from the aspect of thermal energy raw materials, so the Soko and Štavalj deposits can be appealing given the significant reserves, but significant investments have to be made in the modernization of mines in this area in order to achieve the required capacity increase. In the distant future, the exploitation of oil shale should also be considered, which can be a significant resource for the production of electricity and crude oil. It has been estimated that the Aleksinac basin alone has geological reserves of about two billion tonnes, while there is a total of 4.5 billion tonnes of oil shale all over Serbia.
SUSTAINABLE MINING AND ENVIRONMENTAL PROTECTION - A POSITIVE EXAMPLE As an economic branch, mining has recently been criticized by various environmental and other movements and associations, now more than ever, and mining is generally marked as a major threat to the pollution of all environmental media. The question is what is our reality, but also what needs to be done for mining to become environmentally friendly, i.e. sustainable. Speaking of sustainable mining, whatever that means, we must reconcile the two sides - one is the real need as a prerequisite for modern living and that is the exploitation of minerals and the other is the increasingly developed awareness that we must preserve the environment for future generations. There is a lot to say about this and not everyone will ever agree or share a common view. As a mining engineer, I will always advocate and support the development of mining through new research and potential exploitation of mineral resources. I would not like to go into that in more detail, but I must underline that the state must play a greater role in the profit made by the exploitation of mineral resources and that this should be one of the key prerequisites when launching a new project. This is something that has to be known in advance, namely what financial effects and other benefits are expected, through the collection of all types of taxes, contributions, ore rents and paying out salaries, as well as through the participation of our companies in projects. Special attention should be paid to the best interests of local communities where the mines are located, as their support is very much needed. This is why the sustainability of the project is of great importance, in terms of environmentally acceptable negative impact on the environment. To achieve that, the latest exploitation technologies, processing of useful substances and safe disposal of mine tailings and mining waste must be applied. The protection of groundwater and waterways, the rational consumption of water resources, the protection of land and, of course, air quality all must be taken into account. Is that possible in practice? I think it is. Although we have a lot of bad examples around us, and there are probably more than we are not even aware of, I would like to cite an encourag-
This year, the 8th Balkan Congress will finally be held in Belgrade, organized by the Mining Institute, from September 28 to 30. The Congress was initially postponed due to the coronavirus pandemic
ing example from our recent practice. After several decades, today we have the opportunity to attend the opening of the copper and gold mine, which is incredibly important for this part of the world. I am happy to report that the Mining Institute also had its role in that because we inspected the mine's technical compliance during all three phases of the opening and exploitation of the Čukaru Peki deposit, that is the upper zone, down to 260m underground. This mine fulfilled all its legal obligations regarding environmental protection, and in some segments, it even went up and beyond. I will not go into the project details because it would take up too much time, but I will mention several good solutions such as the technology of filling the excavated pit space with paste backfill, where part of the tailings is returned to the excavated space, whereby the possibility of deformation and subsidence of the terrain on the surface is significantly reduced. Also, the treatment of wastewater is environmentally friendly, because wastewater is not discharged into waterways but is treated, purified into the water and returned to the technological cycle of preparation of mineral raw materials primarily. After purification, the residue in the form of neutralized sludge is pumped to the specially designated landfill or flotation tailings. All these facilities are built in line with the highest environmental standards, i.e. they are protected with a waterproof foil so that pollution of the surrounding soil and groundwater is prevented. In terms of treating purified water, I am primarily referring to the treatment of water taken from pyrite concentrate landfills, tailings landfills and drainage water from pyrite concentrate landfills (process wastewater) and the treatment of water extracted from underground mining facilities (mine wastewater). Of course, these are just some of the solutions that demonstrate the seriousness and determination in reducing the negative impacts to an acceptable level. I would also like to point out here, and this is strongly related to the sustainability of mining exploitation, is monitoring the impact and adequate reaction, through constant monitoring, but also regular inspections and mining and environmental inspections, so that the mine is operational at all times while adhering to all project measures. This is very important because we
are witnessing that, in practice, disturbances during mining exploitation are often ignored, which can significantly jeopardize the quality of all environmental media. Last but not least, I would like to point out that mining has no alternative, that the exploitation of mineral resources can contribute to the economic progress of the country, but also that all possible negative impacts on the environment should be seriously understood and considered, and that through the use of new technologies we can minimize these negative impacts. This is the true meaning of sustainable mining if we can call it that.
ACTIVITIES OF THE MINING INSTITUTE IN SERBIA'S MINING SECTOR The Mining Institute carries out its activities in line with market principles. The Institute has been utilizing its potential during its decades-long work (founded in 1960), depending on the needs of the mining economy. In addition to the Design Bureaus, the Institute has also developed its own accredited testing laboratories such as the Geomechanics Laboratory, the Environmental and Working Environment Protection Laboratory and the Solid Fuels Laboratory. These are several important projects and services that the Institute is currently working on – with the help of conceptual and construction projects, it provides solutions to the problem of external transport, including ash, slag and gypsum landfills for the Chinese company CMEK in the construction of Kostolac B3 Thermal Power Plant, carries out inspections of technical compliance of mining facilities at the Čukaru Peki Mine, is engaged in the Belgrade Subway project, conducts testing and calibration of automatic measuring systems in Serbian thermal power plants, measures emissions of pollutants, carries out coal quality testing, etc. This year, the 8th Balkan Congress will finally be held in Belgrade, organized by the Mining Institute, from September 28 to 30. The Congress was initially postponed due to the coronavirus pandemic. I would also like to mention the publishing activity of the Mining Institute. In addition to the magazine Rudarski Glasnik (The Mining Gazette), which is published regularly, the Institute has recently published a very important monograph, written by a group of authors, and called 'The Mineral Resources Complex of Kosovo and Metohija'.
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Mining is the Basis of Every Development
I think a lot of work is needed to popularize geology
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DUŠAN SIMIĆ Founder and CEO of the Jantar Group
e spoke with Dušan Simić, founder and CEO of the Jantar Group, about the challenges that the company has been facing, the current situation in geology in Serbia and the future of geological exploration.
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You have been at the helm of a leading private company in Serbia and the region in the segment of geology for 22 years. What challenges does the company face today? — The Jantar Group has been engaged in geological exploration since 2000, and our very beginning was very difficult due to the prevailing belief that private companies should not be engaged in geological operations. The first challenge was to convince investors that a private company can do business and provide the same if not better conditions than state-owned companies. The situation changed significantly with the arrival of the first foreign investors because they had extensive experience in working with private companies worldwide. Another big challenge is a recent one because geology as a discipline is anathematized by individuals and political groups. This creates big problems in the field and creates a bad image of our society. The biggest challenge is new mineral deposits which is a dream of every geologist engaged in this line of work. Considering the war in Eastern Europe and the energy crisis, what do you think about the current situation in Serbia in terms of exploration and sustainable use of geological resources? — There is great interest from domestic and foreign exploration and mining companies, especially for metalic minerals. The current political and military situation has certainly contributed to the higher demand and, rising metal prices on global stock exchang-
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es but has also instilled fear in investors. Some companies (especially smaller ones) are intimidated by the possible escalation of the conflict and the problems that would cause. It is important that large investors still show undiminished interest in investing in exploration. Sustainable use of mineral resources is a very broad topic, but I would like to underline that our laws, especially those regulating environmental protection, are very strict and harmonized with the EU's. Every exploration and exploitation of mineral resources must be strictly controlled at all stages (from exploration approvals and geological exploration to environmental impact studies and exploitation approvals, as well as exploitation itself). Inspection services need to do better, though.
Without geology and mining, there is no civilization as we know it The Jantar Group is a member of the Canadian-Serbian Business Association (CANSEE). What can Serbia learn from Canada, when it comes to geology? — The CANSEE has contributed a lot to improving the geology and mining segment in Serbia with its networking. Serbia can learn a lot from Canada, especially about the state's support for the mining industry. Serbian companies and geologists have learned greatly from their Canadian peers, about how the work is organised and the cooperation with local governments and people in the field. We should also mention environmental protection, where Serbian companies have made great progress by implementing the same standards as Canadian companies, following the laws of the Republic of Serbia which are harmonized with those in the EU. In the year 2000 and in cooperation with the Faculty of Mining and Geology, you held a round table discussion on the topic
"Geology – What to do next?". How would you reply to that question today? — This issue is very interesting, especially in the context of the current situation when, on the one hand, there is strong interest in geological exploration, especially metal, which has become more expensive lately, and on the other, there is great resistance from certain environmental organizations and interest groups. What to do next? Mining, as an economic branch, is the basis of every development. Everything we use in everyday life is a product of mining or is obtained with the help of a product of mining (tools). To be able to talk about mining at all, we must first do geological exploration to, find out what kind of mineral wealth we have. This is the basis for any further mining activities because mining can only exist where there is ore to mine. Much work is needed to popularize geology. Geological exploration is not a nightmare but our need. Maybe geology should be taught as a school subject again (it was abolished in the 1950s). The Faculty of Mining and Geology and numerous associations (the Serbian Geological Society, CANSEE, chambers, SITS, etc.) must have a much larger and more active role in bringing geology and mining closer to people who are not in this profession. One must especially react to various types of misinformation (malicious or caused by ignorance), which are increasingly disseminated today. So, I think a social consensus on geological exploration and mining is needed, with the involvement of all stakeholders – the state, investors, construction companies engaged in geological exploration and mining, institutions (faculties, departments), laboratories, local governments, various civil associations, environmental organizations (NGO sector) and interested individuals. It may not be a bad idea to organize a cluster to address these issues. We need to achieve a balance struck between mining and environmental protection, because without geology and mining, there is no civilization as we know it.
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High Professional Standards in Mining and Geology One of the important roles of the Chamber of Mining and Geological Engineers of Serbia is to elevate the mining and geological profession in Serbia to a higher level, which means adhering to high professional working standards in mining and geology 34
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R E S OU RC E S
ining in Serbia has been developing since ancient times. The Illyrians, Celts and Thracians were also engaged in mining in this area. The expansion of mining in this part of the world began in the time of the Nemanjić dynasty, when the rulers brought miners from other countries, mostly Saxony. They were also engaged in mining in Kosovo and Metohija. There is a wide variety of metal and nonmetal ores in Serbia, in significant quantities. The most common is iron, chromium, manganese, molybdenum, cobalt, cadmium, copper, antimony, lead and zinc. The beginnings of mining in Serbia go back several thousand years. Traces of this ancient activity can be found, although quite rarely, in the ores of mercury, iron, copper and gold. In addition to the ancient times, mining in Roman times also
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In addition to the ancient times, mining in Roman times also flourished in all our orebearing areas
flourished in all our ore-bearing areas, albeit, there is very little written information about the Roman mining in our region. We know much more about medieval mining and its scope is evidenced not only by traces of old mining and smelting works but also in various historic notes which clearly show that once, during the Middle Ages, extensive and technically advanced mining flourished in our region, more advanced than in many, at that time, more developed European countries. Mining was especially intensive in the medieval Serbian and Bosnian states in Novi Brdo Janjevo, Trepča, Kopaonik, Rogozna, Rudnik, Kratovo, Srebrnica, Kreševo, Fojnica, etc. The rich ores of silver-bearing lead and copper in Serbia, Central Bosnia and Macedonia gave rise to the formation of large settlements, towns and merchant centres in the Serbian and Bosnian states. Serbian and Bosnian medieval rulers, feudal lords, Venetian, Dubrovnik and Greek capitalists, Saxon purgars and a diverse population of Serbs, Greeks, Arbanassis, Saxons, Genoese and many others lived in these purely mining settlements and cities for a longer or shorter period of time. Many centuries later, Serbia con-
tinues to use its mineral resources, while its Ministry of Mining and Energy is working full steam ahead. That is how this new professional association came about - the Chamber of Mining and Geological Engineers of Serbia - the establishment of which is envisaged by the Law on Amendments to the Law on Mining and Geological Research, and at the proposal of the Deputy Prime Minister and Minister of Mining and En-
ergy, Professor Zorana Mihajlović, PhD. The Chamber was formed in October 2021 when its Articles of Association entered into force. One of the important roles of the Chamber of Mining and Geological Engineers of Serbia is to elevate the mining and geological professions in Serbia to a higher level, which means adhering to high professional working standards in mining and geology.
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Existing Energy Sources Need to be Preserved We have embarked on the intensive formation of mandatory reserves when crude oil is terribly expensive. Furthermore, we depend on global, geopolitical and climate trends and we have no influence over that
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etail prices of petroleum pro duc t s var y daily, hence the Serbian government has been working on resolving this situation, plus, a decision was made to reduce the excise tax on petrol and diesel. We spoke with Tomislav Mićović, Secretary-General of the Association of Oil Companies of Serbia, about market changes, crude oil reserves and new regulations.
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As of the 1st of July, oil companies will have to have operational reserves tantamount to quantities required for four days of average production, which means that they must provide both goods and storage space at their own expense. Is there enough space for such storage in Serbia? — This measure doesn’t exist in any modern European economy. Existing storage tanks can take quantities tantamount to four days of average net consumption, calculated over the previous three years. The Operational Reserves Degree envisages that the number of days will increase year on year until we reach 10 days of average consumption in the previous year. Then this will become quite a problem and the largest importers of petroleum products will have to finance the construction of storage space. The only large oil producer, the Petroleum Indus-
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TOMISLAV MIĆOVIĆ Secretary-General of the Association of Oil Companies of Serbia
In Serbian, as in any other market, the taxes on petroleum products should be commensurate with the purchasing power of citizens, as well as the country’s economic power
try of Serbia (Naftna Industrija Srbije – NIS) has available capacity since the Novi Sad refinery no longer refines oil, so the entire storage space can be used for this purpose. The company also has sufficient storage space throughout Serbia from the time when it was the only distributor on the market and met the needs of the then entire market.
How sustainable is this measure, i.e. is it financially viable, and will it cause additional problems? — We tried to point this out two years ago when the draft decree was on the table and when the Ministry of Mining and Energy decided to activate that provision of the law. Operational reserves have been stipulated in the Energy Law since the law’s 2004 version, which means that since then line ministries could have ordered distributors to form the reserves. In 2019, the Ministry decided to activate this provision. Subsequently, we warned that this provision will have to be reflected in the retail price of fuel because it is an additional cost that no one had had to bear so far. Crude oil and oil derivatives producers and importers will have to engage significant funds for both the goods and storage facilities, simply based on the price of oil derivatives. Since we have been adapting to the EU directives, many things have changed in Serbia and they always require new investments and incur additional costs. Until 2013, we had Diesel D2 and leaded petroleum, the production of which was significantly cheaper than today's types of fuel that meet current EURO standards.
In the meantime, the government has introduced an energy efficiency fee and a fee for the formation of required reserves. Mandatory marking and monitoring of fuel quality have also been ordered, a cost paid by manufacturers and importers. These are all relatively small cost increases but every year brings on new expenses. It is worth noting that, on top of these costs, fuel excise went up considerably, compared to all countries in the region and countries at a similar development level. This year, in addition to operational reserves, the authorities will also prescribe that biofuel should be added to regular fuel. Bio-diesel, which should be added to Eurodiesel, is twice as expensive as Eurodiesel, and of course, that will affect the fuel’s retail price. If this happens, the state should reduce its fuel-related tax. This situation is unsustainable thanks to constantly growing fees and other costs imposed by relevant regulations. In Serbian, as in any other market, the taxes on petroleum products should be commensurate with the purchasing power of citizens, as well as the country’s economic power. The impression is that no one in the government cumulatively monitors the amount of various state-imposed duties, i.e. whether all the costs that accompany the sale of crude oil derivatives on the market are justified and necessary. Ministries of energy and finance, the Interior Ministry’s Emergency Situations Department, public enterprise Roads of Serbia (Putevi Srbije) and local governments all affect the costs associated with trading in petroleum prod-
practice is not widespread, but if the state doesn’t do something quickly, it will spread like wildfire. Russia had significant surplus quantities of diesel and sold that surplus on the European market. Due to financial sanctions against Russia, many supply chains have been interrupted, and suddenly there is not enough diesel in our region and the whole of Europe. Now, on a European scale, diesel is in high demand and has become more expensive, because it has become a precious commodity. In terms of its price, I don’t think that the oil sector or consumers are going to like what’s ahead of us. Because oil companies will have to engage more funds to provide the same amount of fuel, their costs will rise again, and consumers will need significantly more money to buy fuel. Although, I have to say that the Serbian market is regularly well-supplied.
ucts to a greater or lesser extent, and when we add to this mix the Department of Environmental Protection, someone will either have to make a thorough audit of all costs or we will have extremely high fuel prices in Serbia.
You have stated that, in your opinion, diesel is no longer a fuel intended only for agriculture. How will Serbia, in cooperation with oil companies, solve the problem of the agricultural sector having more fuel than it actually needs? — One of the measures that are extremely counter-productive market-wise is the measure stipulated in the decree on capping the prices of crude oil derivatives, which orders NIS to sell fuel to the agricultural sector at a fixed and unrealistic price of 179 dinars per litre. However, both NIS and the government agreed on this price and the measure is now creating new problems. Smaller fuel retailers are losing their agricultural customers which causes more problems. For most retailers who have one or a handful of petrol stations, farmers are their core customers, and we are talking about between 500 and 600 petrol stations in Serbia. Now, wholesalers who supplied small petrol stations, which are dominant in agricultural areas, have no one to sell fuel to. This gives birth to another problem and that is that you have no way to check whether the diesel fuel, which is bought in this way, will actually be used in agriculture. As it happens, certain quantities of this fuel are used in transport and small and medium-sized companies. There is no way to control these measures. Just to be clear, the aforementioned price of fuel for farmers is too high. In most countries, the agricultural sector has the right to buy fuel with significantly lower excise or even no excise at all, so that it can be competitive and produce as affordable food as possible. But in our country, a whole business was born on the back of the right to purchase diesel at a special price. You can buy a larger quantity of fuel than you actually needed for agricultural work and then sell it very cheaply. There is a very big difference between 179 and 203-206 dinars per litre, and if you are resourceful enough, you can make a tidy profit from this. There are certainly cases of misuse, and although beneficial for farmers, this price can cause harm to other segments of the economy. Still, this
The stability of energy supply must come first, which I and many people in the industry have been reiterating for years
Although fuel prices are high in our country given that the global energy crisis is still not subsiding, they are also relatively affordable, thanks in part to the Serbian government giving up on a portion of budget income that comes from charging fuel excise, but also thanks to oil companies because state-capped fuel prices are not adjusted to suit real changes in production costs, import and finally market distribution of motor fuel.
It is important for the stability of supply that the administration is removed from the market as soon as possible so that the market can react to all the changes that are taking place. How can we achieve this? — I would compare Serbian with other national markets. Unfortunately, Serbia is a locked country and we do not have access to the Mediterranean, where crude oil and oil derivatives are traded. So we buy
goods on the coastline and have to transport them which causes significant costs. We also have a limited number of sources. The stability of the energy supply must come first, which I and many people in the industry have been reiterating for years. I am under the impression that the public was not so aware of the importance of the stability of the energy market. Crude oil drives everything. There is no mobility without oil, whether it is the health service, the army, the police, utility companies, or the transport of people, groceries and other goods. Everything comes to a halt without crude oil! Stability is achieved first by diversifying supply sources. In terms of oil, 30 percent of the diesel consumed in Serbia comes from refineries in the area. They are a kind of cross-border competition to the domestic diesel producer. Market rivalry is important, but so is the existence of logistics supply chains via various energy companies that link our market with several different sources of oil derivatives. We must preserve their business ability, so that they can quickly react at any time and provide their customers, and thus the entire Serbian market, with sufficient oil derivatives. This is stability through diversification. State’s oil and oil derivative reserves are another factor of stability. They should be used only if major disturbances occur and in those circumstances, they become priceless. Mandatory oil and oil derivative reserves in Serbia are formed following the EU directive, but unfortunately, the funds that were purposefully paid into the budget of the Republic of Serbia were not spent for that. More precisely, only about a quarter of some 500 million euros paid by producers and importers was re-directed to the Directorate for Energy Reserves to be used for the formation of required reserves. This is not good because today, when it is extremely important to have complete reserves, we do not have them. From 2014 to date, we missed out on several opportunities to buy crude oil when it was cheap. Now, we have started forming mandatory reserves when crude oil is very expensive. There is a proverb that says “don’t leave everything until the last minute”. It is up to us to do everything in our power to reduce the risks of global, geopolitical and climate developments because we certainly cannot influence them.
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You are the Future!
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Photos: I. Mitrović/SZC
Serbia Zijin Copper has excellent cooperation with high schools in Bor and the Technical Faculty, and it supports the education of young talented people, primarily from technical professions, some of whom do their work practice at the company
C O R P O R AT E
iring new workers is not lagging behind the company's development and its production plans, which in the coming period, need between 200 and 300 new workers to be realized. We are looking for automation engineers, electrical engineers, mechanical engineers and metal-processing engineers, as well as high school graduates with electrical technician diplomas and experience, drivers of heavy trucks, machinists, welders, mechanical technicians, etc. In general, all job applications are welcome and will b e c o n s i d e r e d , " s ay s M i r j a n a Popadić, HR manager at Serbia Zijin Bor Copper. This year too, Serbia Zijin Copper is continuing with its good practice of maintaining long-term and mutually beneficial relationships with the local communities where it operates through employment, training and education support. The company's approach and its desire to build an efficient, successful and safe Bor and Majdanpek in cooperation with its employees always put people first, because people are our most important asset, as are their experience and production expertise, which are the foundation of our company's vision and business. Hence, Serbia Zijin Copper participated in the Employment Fair, which was organized by the Bor branch of the National Employment Service (May 12) in the upper gallery of the Bobana Momčilović Veličković sports venue, under the
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MIRJANA POPADIĆ HR manager at Serbia Zijin Bor Copper
In three and a half years, Zijin Copper employed almost 2,100 mostly young workers in Serbia, so the average age of the employees dropped from 45.5 to 39.5
slogan "You are the future!" Serbia Zijin Copper has excellent cooperation with high schools in Bor and the Technical Faculty, and it supports the education of young talented people, primarily from technical professions, some of whom do their work practice at the company. The talent and knowledge that these young people possess can be applied in the company, so our goal is to give them an opportunity in order to prevent the brain drain in Serbia and help young people to build their future there. "All candidates who apply for a job can expect a transparent and fair selection process, and then a job in a dynamic work environment, competitive salaries, the possibility of career development, bonuses, having organized transportation to work and more. The company's goal is to develop mining for the benefit of the local community, so we hope
that with the development of mining we will be able to create greater employment opportunities so that as many people as possible can realize their dreams," Ms Popadić pointed out. This year's Employment Fair was attended by 25 employers, mostly from Bor, who offered over 450 vacancies. As expected, the biggest crowd gathered at the booths of the Chinese companies Serbia Zijin Copper and Serbia Zijin Mining, but also their subcontractors. In three and a half years, Zijin Copper employed almost 2,100 mostly young workers in Serbia, so the average age of the employees dropped from 45.5 to 39.5. Today, the company employs over 6,000 workers who have an average monthly salary of over 100,000 dinars. The net average salary at the company is about 54 percent higher than the national average.
MINING & ENERGY
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Dedication and Enthusiasm of Local Professionals
Euro Lithium Balkan is a subsidiary of the Canadian company Euro Lithium Inc. In Serbia, it has its headquarters in Divci near Valjevo. The company is engaged in geological research of boron and lithium in the ValjevoMionica sedimentary basin, which so far has yielded positive results
C O R P O R AT E
lthough lithium (Li) has become one of the most interesting mineral raw materials in recent years, the minerals of the element boron (B), borates, are a raw material that has a very wide number of applications across many industries. It is almost impossible to imagine a product, especially those related to modern, green, and agricultural technologies, which do not require borates. The EU has recently classified borates as a "critical raw material”, since they have high economic importance, and due to the lack of similar deposits globally, are reliant on a single supplier. The risk of supply constraint is very high and borates are furthermore non-substitutable and very difficult to recycle. These facts make the mineral deposit that we have discovered and are further exploring to be very exciting. Geological research itself is performed in several phases. Exploratory drilling, which is the predominant method of our field research, yields representative material from the depths of the earth. By further processing of the material, we can interpret the mineral composition, and by subsequent analysis, we can also understand the percentage (content) of boron and lithium in the mineral deposit. Based on this data, further analysis and testing is carried out, especially in terms
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It is important to mention the economic, social and environmental analyses, which are crucial when considering to develop a mineral resource (i.e. to transition from the exploration phase to the exploitation phase). When and if that decision is to be made in the future, it must be made together with the local community
of technological processing of ore material using innovative and ecosmart technologies. It is important to mention the economic, social and environmental analyses, which are crucial when considering to develop a mineral resource (i.e. to transition from the exploration phase to the exploitation phase). When and if that decision is to be made, it must be made together with the local community. Euro Lithium's team in Serbia is comprised exclusively of local professionals, mostly from Valjevo. In addition to dedication and enthu-
siasm in conducting geological research and accompanying activities, our team is excited by that fact that boron and lithium are the critical raw materials of the future. Both elements, i.e. their compounds, are an integral part of the products that form the basis for achieving the Green Agenda and enable sustainable economic development in Serbia, Europe, and the world. The fact that our research's results could have a positive impact on the further development of our society, especially in Valjevo and Serbia, gives us great motivation.