Kosovo makes renewed bid for control of mining behemoth

PRISTINA, Oct 5 (Reuters) - Kosovo’s government plans to make a renewed bid to take control of a huge mining complex and save it from bankruptcy despite strong objections from Serbia which claims it owns the business.

The Trepca lead, zinc and silver mines once employed 20,000 people and accounted for most of former Yugoslavia’s mineral wealth. Now far smaller and with estimated debts of 1.4 billion euros ($1.6 billion) it is still Kosovo’s largest company.

Serbia claims it owns Trepca and other big companies in its former province. Kosovo says Serbia lost rights to state-controlled enterprises on Kosovar territory when forces under late Serbian strongman Slobodan Milosevic massacred and expelled ethnic Albanians in a 1998-99 counter-insurgency campaign.

Parliament is expected to pass a law to cement control of the Trepca complex on Friday over the objections of Serb ministers in the government, which is dominated by ethnic Albanian parties.

Under the proposed law, the government will own 80 percent of the complex and 20 percent will be owned by its miners. The government will also sort through all the creditor claims, mainly from Serbia but also from a number of Greek investors.

Trepca, which operates at a minimum output level sufficient only to keep the mines operational, has been held in trust during the impasse by an agency created by the United Nations tasked with selling state property following the 1998-99 war.

But the new institution that has run Trepca since Kosovo’s 2008 declaration of independence - the Kosovo Privatization Agency (KPA) - has failed to come up with a plan for Trepca’s future and now the complex risks bankruptcy.

Serbia has long sought for the issue of Trepca’s ownership to be put on the agenda of talks mediated by the European Union to ease tensions between the two nations in the aftermath of Kosovo’s violent break from Serbia.

“Trepca’s assets are the property of the Republic of Kosovo and this is not negotiable,” Kosovo’s Prime Minister Isa Mustafa said during a cabinet meeting.

Complicating matters, part of the Trepca complex lies inside Serbia and another part is within a small northern pocket of Kosovo populated by ethnic Serbs who side with Belgrade in refusing to recognise Kosovo’s sovereignty.

$1 = 0.8915 euros Editing by Thomas Escritt and David Clarke