SARAJEVO, Bosnia (November 26,2008) - Bosnia's aluminium smelter Aluminij Mostar will cut production and jobs in 2009 because of low prices for the metal and high electricity prices, the company's general manager said.
Bosnia's largest exporter did not give details of the planned cuts but said government policy had forced it to buy electricity under commercial prices instead of more favourable local prices.
It said in a statement it had lost 24.5 million Euros (30.86 million US Dollars) in 2008 due to high electricity prices.
General Manager Mijo Brajkovic said the price of aluminium on the London Metal Exchange (LME) had fallen almost 50 percent in past months, "resulting in about 15 million US Dollars less in revenues per month".
"Because of all of this, Aluminij has found itself in a very difficult situation and will be forced to reduce production in 2009, fire workers and file a lawsuit against all relevant institutions which brought it into inferior position compared with other electricity consumers," he said in the statement.
Aluminij had previously said it expects 2008 output to rise to 140,000 tonnes of metal from 121,750 tonnes in 2007, after it completed the modernisation of its anode plant in September. It has a 970-strong workforce.
Brajkovic said the policy was also jeopardising the sale of Aluminij to a consortium led by Swiss-based commodities trader Glencore GLEN.UL.
The fall in metals prices due to the global financial crisis poses a threat to the Bosnian economy in 2009 as metals account for around 40 percent of its total exports.
Bosnia's largest steel maker Arcelor Mittal Zenica, a unit of ArcelorMittal, has said it has selectively cut deliveries to some markets to accommodate current demand. But it has not announced output or job cuts.
Ljubija iron ore mines in the northwest of the country, also part of ArcelorMittal, has said it expected a 20 percent fall in 2008 output to 1.2 million tonnes from a planned 1.5 million.