Bosnia’s indebted Aluminij threatens to close down on July 6
Aluminij Mostar, Bosnia’s sole aluminium smelter said on Wednesday it would halt production on July 6 unless the regional government helped the heavily-indebted and loss-making company stay afloat.
“This company will most likely close down on Saturday – only a miracle can help us,” its general manager Drazen Pandza told reporters.
Aluminij, among Bosnia’s biggest exporters, has been in trouble for years over debt accumulated because of high alumina and electricity prices.
The company is 44-percent owned by the government of Bosnia’s autonomous Bosniak-Croat Federation, with small shareholders holding another 44 percent and the Croatian government the remainder.
Aluminij, which employs 900 workers, has been trying to reach a deal with the regional government on subsidised electricity prices. Its closure would put at risk some 10,000 jobs, taking into account its contractors and the aluminium processing firms it supplies with the metal.
But the government has warned that its future support would depend on an audit of Aluminij’s operations it had commissioned. It also said that any state aid in the form of subsidised power prices was out of question because of open market regulations.
Last week, it launched talks with a consortium led by London-listed miner and commodity trader Glencore, focusing on a possible restructuring of Aluminij but no deal has been reached.
The government is due to convene a session on Thursday but it is unclear whether it would include a debate over Aluminij into its schedule.
“We do not see a way forward after Friday. The situation is dramatic. We can only hope for a miracle to happen tomorrow but it is quite unlikely,” said Pandza.
Aluminij’s total debt amounted to nearly 380 million Bosnian marka ($219.55 million), of which 280 million marka was to the state power utility EPHZHB, which last month stopped supplying Aluminij with power at favourable prices agreed with the government last December.
($1 = 1.7308 marka)
(By Maja Zuvela; Editing by Louise Heavens)