PODGORICA (Montenegro), December 15 (SeeNews) – Montenegrin aluminium smelter KAP is about to launch three upgrade projects worth a combined 3.5 million euro ($4.7 million), its CEO Vjaceslav Krilov said.
A production line rolling out 40,000 tonnes of small ingots per year for the automotive industry will enter service at the end of 2011, Krilov said in an interview with Montenegrin daily Pobjeda (www.pobjeda.co.me) earlier this week.
The investment in the production line will total 700,000 euro. Sales of small ingots will fetch a profit of some $350-$400 per tonne depending on market conditions, Krilov said.
The second project, an upgrade of KAP’s foundry unit, will enable the company to produce yearly 15,000 hard-alloy castings for pressing. The 1.6 million euro investment in this project is expected to fetch a profit of $800 per tonne in sales when completed. The project could be implemented in six months.
The third project, an upgrade of KAP’s silumin production line, will cost 1.2 million euro, Krilov said. The line's capacity will be 20,000 tonnes a year and the preparation for production of the first motor engine piston alloys will last six months.
In the autumn, Montenegro took over half of the majority stake in KAP held by Russia’s CEAC under a deal signed in November 2009. Under the deal, Montenegro agreed to issue sovereign guarantees worth 135 million euro for the restructuring of KAP’s existing debt and for the company's planned modernisation. As a result of the deal, Montenegro's government and CEAC own 29.365% of KAP each.
The government has also agreed to subsidise KAP’s electricity purchases by 15 million euro a year under the same deal.
High electricity costs have been denting KAP’s profits and Krilov said the company should seek a lasting solution to its power supply problems. KAP has secured government-subsidised electricity purchases until 2012.
“An analysis seeking a solution for securing an own [energy] source for the period after is being prepared,” Krilov said in the interview with Pobjeda.
He added several options aer being considered, among which the construction of a second generation unit at the Pljevlja thermal power plant.
“For the transition period it is necessary to secure electricity purchases on the Serbian market and - through swap contracts - with the East European markets until a own power source is built or secured,” Krilov said.
($=0.7477 euro)