Saturday, January 5, 2008


MOSTAR, Bosnia (January 5,2008) - Bosnia's sole aluminium plant Aluminij Mostar, which is facing privatisation to a strategic investor in coming months, reported yesterday record annual production of 121,750 tonnes of metal in 2007.

Exports of 240 million euro ($353.3 million) remained at the same level as in 2006 because of the lower prices of aluminium on the world market, General Manager Mijo Brajkovic told a news conference.

Brajkovic said the company has invested about $15 million in the modernisation of its aluminium foundry and planned to complete a $45 million modernisation of its anode plant in mid-2008, which would boost output by 15,000 tonnes a year.

"With this modernisation of the anode plant ... Aluminij will very soon reach an output of 135,000 tonnes of aluminium," Brajkovic said.

The privatisation of the plant, based in the southern Bosnian town of Mostar, was launched last year and three bidders shortlisted for an 88 percent stake equally owned by the FBIH entity government and small shareholders.

The minimum price of the stake is 76.8 million Euros.

All bidders - Swiss-based commodities trader Glencore GLEN.UL, Britain's En+ Group and Greek metals, energy and engineering group Mytilineos - have conditioned the bids on cheap power supplies which the government is unlikely to approve.

Brajkovic said that the commission for the privatisation of Aluminij would talk on Jan. 22 to Glencore, in a consortium with one local and one Croatia's firm which was ranked best bidder, to discuss terms of the sell-off agreement.

The commission's head Enes Ganic has said that some bidders had linked the power cost with the price of aluminium on the London Metal Exchange MCU3 and conditioned future investment on low power prices.

Ganic said that only the government could decide whether to annul the tender or subsidise Aluminij, if it considered the privatisation to be of strategic importance.

Brajkovic said that a future buyer should invest some 300 million euros but that the government first needed to guarantee the regular power supplies.

The Mostar-based power company announced last month it would cut power supplies to Aluminij by 40 megawatts in 2008.Brajkovic said that power cuts may result in reduced output and lay-offs, and in the failure of the privatisation process.

"We can manage to continue with production this month but you cannot tell buyers that you don't have secured power supplies and expect them to invest 300 million euros," he said.

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