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InvestBulgaria Agency: Metal industry is cornerstone for economic growth, sustainable development

InvestBulgaria Agency: Metal industry is cornerstone for economic growth, sustainable development

InvestBulgaria Agency (IBA) is a governmental organization, established to attract investment to Bulgaria, to assist project set-up and to ensure successful project development resulting in new jobs, exports and know-how transfer to the Bulgarian economy. The agency helps potential and existing investors to explore the business environment and to develop their investment opportunities in Bulgaria. Mila Nenova is Executive Director of the agency.

InvestBulgaria Agency has identified the manufacturing industry and the metal production industry within it as a key sector for Bulgaria’s economy. Why is that, what makes metal manufacturing so important?

Metallurgy is an important industry, it is an essential part of the key sectors in Bulgaria, such as the automotive industry, mechanical engineering, etc. It increases Bulgaria's competitiveness from an economic point of view, creates new jobs and creates conditions for greater diversification of different sectors in Bulgaria. In terms of human capital, it promotes development in education to meet the demand and need for highly qualified personnel such as engineers and specialists. In recent years, there has been a high interest in investments in metallurgy, making it a leading sector in the Bulgarian economy. Investments in metallurgy are important because they cover the fields of science and technology. 

The EU mineral raw materials industry is the base for other EU industries, ensuring a minimum supply of metals and minerals, some of them identified as critical and strategic for the value chains required for the European economy and its transition to a low carbon economy. The example of the steel value chain shows the importance of metals and minerals for this transition.

Your role, among others, is to facilitate the investment process on the Bulgarian market. From an investment perspective, what are the key advantages of the local metal production industry?

InvestBulgaria Agency (IBA) is an executive agency under the Ministry of Innovation and Growth, created with the aim of attracting investments to Bulgaria. It supports the construction and successful development of projects leading to the opening of new jobs, export and transfer of know-how in the Bulgarian economy.  

IBA operates entirely under the Investment Promotion Act (IPA), through which the state stimulates investment projects that are of high added value and projects in high-tech industries and activities are essential. 

In this regard, the IPA allows potential investors to benefit from incentives that will help them and facilitate the implementation of investment projects. The measures are  two types - financial and non-financial. The first of the financial measures is the reimbursement of  social security contributions of newly recruited staff for a period of one year when the investment is implemented. This refers to the contributions made by the employer, which are in the range of 17-19% of the gross salary. It is particularly important in the high-tech and information technology sectors because the investment there is in human capital and not so much in production. Another financial measure is the partial provision of financial resources for the training and retraining of newly recruited staff, up to EUR 2 mln can be reimbursed. This training can also be carried out in other European countries. A financial incentive that has been used a lot over the years is the provision of funds for the construction of the technical infrastructure elements up to the property boundary (e.g. for the construction or rehabilitation of a road). The most significant financial incentive applicable to priority investment projects crucial for Bulgaria's economic structure is the direct financial grant provided by the Bulgarian government. According to EU regulation, the size of this grant depends on the unemployment rate in individual regions. If this rate is above the national average, the intensity of state aid is higher and vice versa. For example, the South-West region, which includes the city of Sofia has an eligible state aid intensity of up to 20%, for investments in Northern Bulgaria and all other regions the state aid intensity is up to 50% or 60%.  

One of the non-financial measures is individual administrative services. An expert from the agency is directly responsible for the successful implementation of the investment project, facilitating the dialogue between the investor, the state and local authorities in terms of obtaining permits, licenses, etc. Furthermore, local authorities are required to expedite the issuance of pertinent documents by one-third, recognizing the crucial importance of time in the process.

An additional incentive involves the opportunity to acquire land, owned by the state or municipalities, for the investment project implementation, without the need for an auction, at market prices. Different companies benefit from different types of measures, these are declared at the time of certification. 

According to the Investment Promotion Act for the period 2005 - 2023, a total of 25 projects have been certified in the metallurgy sector with a total value of BGN 1.9 bln and 2 113 jobs created.

Are there new trends emerging in the development of the industry?  

The circular economy, nature restoration and decarbonization are crucial trends in the metals industry. These objectives are part of the “Sustainable Mining Initiative”, which aims at reducing the negative impact on the environment. The circular economy introduces new models of production and consumption: products are shared, reused, repaired and recycled for as long as possible. Therefore the lifecycle of products is extended as much as possible and there’s minimum waste.  

Mining and metals companies are increasingly looking to reduce their environmental impact by implementing new technologies and ways of working. A new challenge for the raw materials industry is the implementation of the European Green Pact. Metals are integral to the low-carbon transformation of sectors that are key to the green transition, such as renewable energy sources, battery storage, the shift to green transport, etc. New trends in the industry include the entry of high-tech processes with high degree of automation in production. Automation contributes to higher precision, reliability and quality, which also requires a more highly skilled workforce. 

Many companies in Bulgaria are partnering with universities and schools to open new specialized classes. The industry is also adopting automation and robotic processes as solutions to tackle the shortage of adequately trained staff.

Metallurgy is a sector of the future, companies operating in it are striving to satisfy markets by offering more and more innovative and diversified products, digitalization and automation of the production processes. The use of low-carbon and highly recyclable raw materials enables the sector to expand its potential. Metallurgy is at the heart of solving many circular economy problems. 

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