SARAJEVO (Bosnia and Herzegovina), September 22 (SeeNews) – Bosnian aluminum smelter Aluminij will complete corporate restructuring in the next six to eight months and return to full production capacity in 12 to 14 months, the company's new director Mario Gadzic told SeeNews in an interview.
Aluminij is shortly set to settle inherited debts and invest into its neglected manufacturing process as part of the restructuring plan which is currently being implemented in the company, Gadzic said in a response to a SeeNews inquiry.
Restructuring will head in two directions - within the company and towards all outside partners and creditors.
"Inside the company, we will rearrange the organisational structure and work on making the flow of information and decision-making more effective. We will introduce precise cost control, in other words insure the responsible management of resources, as well as risk management which Aluminij has never had", he explained.
Gadzic noted that, on the external plan, the company is working intensively on revising existing agreements and debtor-creditor relations, which are set to be reduced to real market fundamentals with respect to legal provisions and principles of sound corporate governance.
"We are taking rapid, but precise steps, encouraging greater efficiency of each individual employee, in other words, we are using all available factory resources, material and human", Gadzic said.
He admitted that, currently, the company is not performing well - debts are huge and it is burdened by poor decisions made by the previous administration.
In October last year, Aluminij's accounts with local banks remained frozen for 20 days over debts.
Contracts and commitments made by Aluminij's former management are harmful and have put the company in a position where it is dependent on certain suppliers and customers who are causing it damage, Gadzic noted.
One such supplier is power utility Elektroprivreda HZHB and despite the liberalisation of the electricity market in 2015, Aluminij is still purchasing electricity at high costs.
"At the present moment, we are working actively to find a new supplier from which Aluminij can buy electricity at a lower guaranteed price", Gadzic explained, adding that this is sure to cut the company's costs by 1.5 million to 2 million marka ($861,800 - $1.1 million /766,900 - 1 million euro) each month.
"Complete dependence on one supplier, especially in the manner in which this business relationship has been regulated up until now, is a tremendous risk. However, we are on the trail of a decision that will solve this pressing problem. A solution is crucial for the long-term stabilisation of the company's operations", he said.
Gadzic also noted that by supporting his appointment, through its representatives on Aluminij's supervisory board, the government has given its support for his restructuring plan. The government of Bosnia's Muslim-Croat Federation, one of Bosnia's two autonomous entities, is the company's biggest owner.
Commenting on the prospects for Aluminij's privatisation, which has been scheduled by the Federation's government, Gadzic said that the government's goal is not a deal at any price.
In July, Aluminij's acting board of directors said it is seeking a strategic partner in Germany to restore its production to full capacity. Gadzic explained that the company hasn't set its sights on one country, adding that an outside investor is expected to help Aluminij achieve its long term plan to move from exporting primary metal to exporting finished product from aluminum, such as construction profiles, power cables, and automotive rims.
"I am not talking about megalomaniac projects but about real opportunities that are currently being offered - such as investments into manufacturing production within our company - by several European countries," he said.
Gadzic believes that by procuring certain equipment for the production of products, Aluminij can begin the process of stabilisation which could positively effect Bosnia's economy.
The government of Bosnia's Muslim-Croat Federation owns 44% of Aluminij, as much is controlled by workers and small shareholders, while the Croatian government holds a stake of 12%.
(1 euro= 1.95583 marka)