Mining News

Serbia’s mining revival

Posted by Alana Wilson on 6/24/2013 10:58:58 AM

By Alana Wilson

Serbia is on the cusp of a mining revival according to an article featured recently in the National Post. Although gold and copper has been mined in some parts since Roman times, the mining sector has been stagnant since the early 1990s when wars tore Yugoslavia apart. However mining exploration is resurging—fuelled by commodity prices, high mineral potential, and investor pressure from increasingly cautious investors looking to move away from projects in non-traditional mining areas.

International mining firms are under pressure from increasingly cautious investors to move away from projects in non-traditional mining countries where a lack of good roads, railways, water and power, as well as skilled workers, can hike costs.

According to the Serbia’s minister for mines, Milan Bacevic, there are now 300 companies registered for mining and exploration, many of which are small. These firms are ‘attracted by the security and infrastructure as well as the relatively new political stability’.

Increased exploration and mining activities in Serbia resulted in it being added to the Fraser Institute Survey of Mining Companies 2012/2013 where it ranked 52nd of 96 jurisdictions evaluated. Our survey is based on the opinions of mining executives representing 742 mineral exploration and development companies around the world.

Serbia ranked 36th (of 96) jurisdictions in this year’s survey in terms of its mineral potential with 20% of respondents feeling that Serbia’s mineral potential ‘strongly encouraged investment’. However stagnation in mining since the 1990s has likely limited exploration, and according to the post article, early results from recent exploration have impressed investors and analysts.

According to our mining survey, the most attractive policy factors in Serbia were the quality of infrastructure (42% responded that it ‘encouraged investment’) and the availability of labour and skills (30% responded that it ‘encouraged investment’). Environmental regulations and labour agreements were also attractive to investors – with 27% of respondents for each factor citing that it ‘encouraged investment’.

Serbia’s lowest policy factors in terms of attracting mining exploration investment were corruption, political stability, community development conditions, and uncertainty concerning disputed land claims which no respondents believed ‘encouraged investment’. Of these factors, corruption was reported as the most dissuasive to mining investment with 70% of survey respondents mildly discouraged and 20% strongly discouraged from investing due to this factor.

While only one year of survey data is available for Serbia, this region continues to be of interest from a policy perspective as it seeks to benefit from its natural resources. There appears to be room to grow as Bacevic notes that that Serbia uses less than 10 per cent of its total mining resources. The Serbian government hopes that mining will be a bright spot in the economy that is struggling with high unemployment as well as a mounting budget deficit and debt.

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