Divided Kosovo city mines a dream of riches

By Adam Tanner

MITROVICA, Kosovo (Reuters) -- Nazmi Mikullovci puts the value of minerals beneath the ground here at 10 billion euros ($12.8 billion). But a river running through the area marks a rift so deep they cannot help the Balkans' newest state.

The Trepca mines are a loss-making mountain of debt, environmental damage and legal tangles straddling a disputed border between Serbia and Kosovo, the Albanian majority republic which declared independence from Serbia in February.

The muddied brown of the Ibar River marks that border.

On Tuesday, a mission of 1,900 European and American officials starts arriving to foster peace and stability under a United Nations plan.

Such stability could help revive the mines, a vast complex of lead, zinc and silver that in the past was a font of Yugoslav export revenue and employed 23,000 people.

With mining operations mostly halted during the 1998-99 Kosovo war, many of its factories and warehouses now lie abandoned, a jumble of rusted conveyer belts, pipes and cracked windows where weeds grow tall.

Across the river, half the complex lies in similar disrepair in the northern half of Mitrovica, run by Serbs. Albanian Kosovars rarely venture there to face the Serbs' bitter opposition to independence.

Mikullovci, a 65-year-old Albanian who directs the south side, has not crossed to the northern section in six years.

"It is strange," Mikullovci said. "In 2002, the last time I was in the north part of Trepca, I had problems, and they asked me so as to avoid future problems not to come again."

In the past Serb and Albanian miners cooperated, and experts say they could do so again if the mission -- overseen by the European Union in Kosovo up to the Ibar River and by the United Nations in Serbian areas -- helps ease tensions.

"Given the right circumstances they can work together," said Michael Palairet, an honorary fellow at the University of Edinburgh who has written a history of the Trepca mines.

Finding a legal and political basis for the mines would be a significant step for the country, recognized by 53 countries so far but not Russia or Serbia.

Wedged between Serbia, Macedonia, Albania and Montenegro, its main exports are scrap metal and minerals along with food. Unemployment is around 45 percent and with corruption widespread, Kosovars make just $1,800 per person annually -- a third less than their cousins in neighboring Albania, according to the U.S. State Department.

$13 BILLION HEADACHE

Economically, the timing for Trepca could hardly be less propitious. Industry experts say it is the world's third largest mining region for lead, zinc and silver, but as the world economy slows prices for metals have slumped.