You have 10 free articles left this month. Get your freeBasic subscription now and gain instant access to more.

Bosnia's Aluminij gives up plan to restart foundry production in Sept over lack of funds

Author Iskra Pavlova
Bosnia's Aluminij gives up plan to restart foundry production in Sept over lack of funds Photo: Fena

SARAJEVO (Bosnia and Herzegovina), August 20 (SeeNews) - Bosnia's ailing aluminium plant Aluminij, which discontinued operations more than a month ago, will not be able to restart production at its foundry unit in September as planned due to lack of funding, the company's management said.

"Without the promised financial support, Aluminij is unable to restart production on its own," the management said in a statement made available to SeeNews on August 20.

According to the company's restructuring plan adopted in July, Aluminij was due to restart the foundry unit on September 1, but had to receive a certain amount of money by August 1 in order to do this, the statement said without elaborating.

"However, as of today, the company has still not received the needed financial support and therefore the process of restarting production has not taken place," the statement said.

According to the restructuring plan, which envisages Aluminij's financial consolidation by December 10, soon after the restart of the foundry the company is expected to resume production at its anode and electrolysis units, as well. In the first phase of production relaunch, the company it is expected to employ 350 workers, 74% of whom would be engaged in production.

The management also said that they are in contact with the only potential investor interested in Aluminij, but did not provide a name.

According to news agency, the potential investor is China Machinery Engineering Corporation (CMEC), which is already present in Bosnia where it is building two wind parks close to the south-western town of Tomislavgrad.

Mostar-based Aluminij shut down its operations on July 10 after its power supply was cut off due to swelling unpaid bills.

Aluminij has been one of the largest electricity consumers in Bosnia, accounting for a quarter of the electricity consumption in the Federation when operating at full capacity. The company has been in persistent trouble over high prices of electricity and raw materials. Its outstanding debt to power utility Elektroprivreda HZHB reached 280 million marka ($159 million/143 million euro).

Aluminij employed 900 people and had numerous suppliers and other cooperating units, including Croatia's Adriatic port of Ploce, with the Mostar-based company engaging 20% of the port's capacities.

The Federation government controls 44% of Aluminij, followed by the government of neighbouring Croatia with 12%, with the remainder held by smaller shareholders.

The Federation is one of two autonomous entities forming Bosnia and Herzegovina. The other one is the Serb Republic. 

(1 euro = 1.95583 marka)