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

Bosnia's Federation prepares response to Chinese-Israeli offer for Aluminij

Author Iskra Pavlova
Bosnia's Federation prepares response to Chinese-Israeli offer for Aluminij Photo: Fena

SARAJEVO (Bosnia and Herzegovina), November 8 (SeeNews) - The government of Bosnia's Federation entity said it has mandated prime minister Fadil Novalic to deliver its response to a memorandum for acquisition of struggling aluminium plant Aluminij submitted by an Israeli-Chinese tie-up.

The Federation government discussed the memorandum submitted by Israel's M.T. Abraham Group in partnership with China Machinery Engineering Corporation (CMEC) and China Non-ferrous Metal Industry’s Foreign Engineering & Construction, it said in a statement on Thursday following its weekly meeting.

Aluminij halted production in the summer.

The government gave no further details on the matter.

News wire, however, quoted the Federation's energy minister Nermin Dzindic as saying on Thursday that there 10 questionable points in the memorandum which need further discussions.

Among the questionable issues is a request for a fixed electricity price of 40 euro ($44) per megawatt hour for a ten-year period, which the Federation government cannot guarantee since the electricity price is formed on the market, Dzindic said.

In addition, the potential buyer seeks freezing Aluminij's debt repayment for a certain period and requests guarantees for several credit arrangements, which is outside of the Federation's government jurisdiction, Dzindic added.

The investor is also seeking the entity's government approval for a joint project of building a thermal power plant solely for the needs of Aluminij, which will be initially fired by coal and later on by natural gas.

Aluminij shut down its operations on July 10 after its power supply was cut off due to swelling unpaid bills. Following the shutdown, the Federation's government decided that Aluminij should continue to operate and come up with a rescue plan by the end of 2019.

In July, prior to Aluminij's shutdown, British-Swiss company Glencore terminated its talks with the Federation government for taking over the aluminium smelter after failing to agree on the future electricity price.

According to earlier media reports, Dubai's Waqt Trading LLC and UK-headquartered industrial and metals group Liberty House have also shown interest in investing in the Mostar-based aluminium producer.

The Federation's 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. 

($=0.905042 euro)