Dejan Šoškić is a Full Professor at the Faculty of Economics in Belgrade. He teaches financial markets, risk analysis, and derivatives.
He served as the Governor of the National Bank of Serbia from 2010 to 2012.
He is a Fulbright scholar, a member of the Serbian Academy of Economic Sciences, and the author of numerous books and over 70 scientific papers.
I haven’t heard of such a plan until now. From an economic point of view, that would always be a challenging situation to a certain extent, because every investment project must take into account so-called opportunity costs—namely, what else could be done in that space or whether there is an existing economic activity that would be lost by starting the project. As a rule, projects are ideally implemented where they don’t cause a loss of prior economic activity. On agricultural land, you certainly lose agricultural production, potentially tourism, or other sectors. Therefore, I believe that from both an ecological and economic perspective, these are not favorable circumstances for such investment projects.
We started from publicly available data: the company’s website, official statements, the consulting study done for the company, and our own tax regulations and spatial plans. We applied standard investment analysis techniques.
The company predicted cash flows over 40 years of extraction. In the first five years, they would invest about 2.45 billion euros. Much of that money would go toward imported machinery and foreign services, meaning the actual benefit to the domestic economy during that phase is small. The company projects 184.5 million dollars in "normal years" for Serbia, including mineral royalties (about 40 million annually), corporate tax, dividend tax, and payroll taxes.
However, because of the initial large investment, our laws provide tax exemptions. Practically, for the first ten years, there would be no corporate income or dividend tax. If they apply for additional capital investment incentives, those exemptions could last through the 20th year. When you project these cash flows until the end of the project and apply a discount factor (the weighted average cost of capital, which we set at 10% for Serbia), you arrive at a Net Present Value (NPV). Divided by 40 years and the current population, it results in 2.6 euros per person per year. No one has yet contested this calculation.
The state should build infrastructure for society, but when specific expenditures are made solely to reduce a private investor's costs and make their project more profitable, we must ask if that is in the public interest. The company’s own website mentions that in other countries, they took on obligations that they haven't here. For instance, in Madagascar, they gave the state a 20% stake, and in Congo 15%, without the state having to invest.
In Serbia, the spatial plans suggest the state will fund clean water supply, railways, roads, and electrical infrastructure for the mine—projects that wouldn't otherwise be necessary in that area. Why should Serbian taxpayers fund this while the investor takes the lion's share of the profit? Especially since Serbia would have zero ownership stake in this model.
The risk of "weak institutions." International observers have noted a constant decline in Serbia's institutional development and a rise in corruption since 2014. Without strong, independent institutions, we cannot control "negative externalities" like air and water pollution.
There is also the "Dutch Disease" risk—where focusing on a low-accumulation branch like mining leads to the neglect of other sectors like education, science, and high-tech development. No country has ever become rich solely by mining. Wealthy countries are built on human capital and knowledge.
Mining can be an economic branch, but it is not a path to long-term wealth. Prosperity comes from education, science, and high-tech innovation. We should not be a country that takes a 3% or 5% royalty while the rest goes to a foreign company that does not share our long-term fate. We need public debate, not decisions made by a very narrow group of people.
Naši gosti, nezavisni stručnjaci iz raznih naučnih oblasti, pružiće stručno i objektivno mišljenje o ovoj temi, koja ima dalekosežne posledice za našu prirodu, buduće generacije i zdravlje.
Naši gosti, nezavisni stručnjaci iz raznih naučnih oblasti, pružiće stručno i objektivno mišljenje o ovoj temi, koja ima dalekosežne posledice za našu prirodu, buduće generacije i zdravlje.
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