Workers protest as economic woes spread in Balkans

BANJA LUKA, Bosnia, Feb 9 (Reuters) - Hundreds of workers rallied in the Balkans on Monday to demand salary payments and government support to offset falling metal prices in a sign global financial crisis has hit the region with full force. In Bosnia, workers of Bosnia's only alumina producer Birac protested in the main square of Banja Luka, the seat of government, carrying signs reading "The Factory is Our Life" and "Who will Feed our Children?" In Montenegro's capital Podgorica, aluminium workers demanded to be paid their salaries and an immediate restart of suspended production

Non-European Union countries of former Yugoslavia have been spared some immediate effects of the global financial crisis because of their isolation from western European economies. Monday's protests were a reminder that this relatively poor region which has suffered jolts of political instability in the past is not immune from the pain spreading across Europe.

Birac employs about 1,100 people. But the jobs of nearly 1,000 additional miners in nearby Milici could also be affected, in addition to jobs in railways and transportation, as the bauxite mines there sell all of their output to Birac.

"If the alumina plant stops operating, we too shall stop operating," said Mirko Dukic, the leader of the Milici mines trade unions. "I cannot think what will happen to us and our families unless the government helps us."

The company was forced to halt production in early January after gas supplies from Russia were cut. It has only restored the production of zeolite -- a chemical used in the production of detergents -- since then.

Birac, majority owned by Lithuania's Ukio Bank Investment Group


, has felt the effects of the downturn since last year, when the prices of alumina and aluminium begun to fall on the world market.

"This crisis began in August and originated in the global economic crisis," said Predrag Tomic, president of the Birac trade union. "The whole production process has been brought into question, as well as the livelihood of nearly 6,000 people."

Alumina is a raw material made from bauxite which is used in the production of aluminium.


Birac employees in Banja Luka, the biggest town of Bosnia's Serb Republic, demanded the government help the company stave off closure by rescheduling debt payments and granting it subsidies for gas, electricity and transportation.

"The employer cannot solve it alone, they need the government help to continue production that has been reduced to a minimum 20 percent capacity," Tomic said.

In Montenegro's capital Podgorica, aluminium workers demanded to be paid their salaries and an immediate restart of production at the Kombinat Aluminijuma Podgorica (KAP), a Russian-owned aluminium plant.

Metal workers from the central town of Niksic and tobacco workers from Podgorica said they would rally in front of Montenegro's main government building later on Monday.

The Bosnian alumina plant has accumulated debt for electricity, gas and transportation estimated at 80 mln marka ($53 million). Trade union leader Tomic said the price for alumina had dropped from $435 per tonne in August to $170 today, while production costs remained the same, at $320.

Trade union leaders want the Serb Republic government to reschedule debt payments for the past three months.

In August, Birac reported its first profit after years of losses, which it explained by investment in modernisation. In 2007, output at Birac fell to about 300,000 tonnes of alumina, down from 470,000 tonnes in 2005. (Additional reporting by Dusko Mihailovic in Podgorica; Writing by Daria Sito-Sucic; editing by Nick Vinocur)