Closure of Bosnia's Aluminij seen triggering job losses across region

MOSTAR, Bosnia, June 7 Fri Jun 7, 2013 1:04pm EDT

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MOSTAR, Bosnia, June 7 (Reuters) - The closure of Bosnia's sole aluminium smelter is set to affect thousands of jobs in the Balkan country and neighbouring Croatia and will lessen their chances for returning to economic growth any time soon, officials warned on Friday.

Aluminij Mostar, faced with high power costs and low prices, has been racking up monthly losses this year and said on Thursday it would close on June 17.

Ljubo Beslic, mayor of the town of Mostar where the plant is based, appealed to the government to help avert the shutdown. "Nobody has the right to close their eyes before this problem," he said. "It would be unforgiving if the government let it close and leave thousand of its workers and their families without bread".

The metal sector is key in Bosnia, impoverished after the 1992-95 war, and accounts for about a half of its exports. Aluminij sells most of its aluminium into the depressed European construction and auto industries.

Aluminij, with a 900-strong workforce, is a major employer in the south of the former Yugoslav state and its biggest exporter. It has repeatedly urged the Muslim-Croat federation government, which holds a stake in the company, to subsidise the price of its power, which accounts for more than 60 percent of the cost of producing each tonne of aluminium.

The Bosnian economy has struggled to develop since the end of the 1992-95 war and unemployment last year was an estimated 28 percent.

The closure of the smelter will have little impact on the oversupplied 45 million tonnes global aluminium market, but will be a big blow to dozens of local metal processors, which employ at least 8,000 workers in Bosnia and Croatia and rely on its supplies.

"The closure of Aluminij will have catastrophic consequences for 1,000 jobs in Croatia's ... light metal factory TLM and another 5,000 in the wider Dalmatia region," said Zdravko Burazer, head of Croatia's metal sector unions.

Among those likely to be hit in Bosnia is Feal, a company with 500 workers and annual turnover of more than 200 million Bosnian marka ($135.6 million).

Branko Radulovic, deputy speaker of Montenegro's parliament and ex-manager of aluminium plant KAP, said that even if aluminium firms manage to stay afloat after Aluminij closes, it would be only temporary, since they would face much higher costs of raw material imports.

"Our eyes are turned to Aluminij and we pray to God for its survival," Radulovic told reporters in the southern town of Mostar. "I see no economic future for the region without base industry and competitive aluminium industry sector," he added.

Aluminij General Manager Ivo Bradvica said the shutdown would take four months to complete and would cost almost $13 million. He said any restart would take much longer and cost at least $30 million. (Editing by David Holmes)

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