Management at Bosnia's sole aluminum smelter resigns

SARAJEVO (Reuters) - The management of Bosnia’s sole aluminum smelter, Aluminij Mostar, has resigned after an only investor interested to help it restart production had submitted an inadequate offer, the company said on Tuesday.

The logo of the Aluminium Mostar (Aluminij Mostar) factory is pictured in Mostar, October 12, 2011. REUTERS/Dado Ruvic

The smelter was shut down in July over debt it had incurred because of high electricity and alumina prices.

The closure followed a failed attempt to find a strategic partner for the company, after the London-listed miner and commodity trader Glencore and other investors pulled out of talks on a possible takeover.

Aluminij accumulated debt of almost 380 million Bosnian marka ($216.5 million), and the financial and tax police were investigating its operations.

In September, a consortium of Israeli and Chinese companies made an offer to invest into the smelter, asking for subsidized electricity prices in return, as well as regional government help in prolonging the debt payment.

The government said these conditions were not acceptable.

On Monday, the company’s Supervisory Board said that new offer from the consortium of Israeli M.T Abraham Group and China Machinery Engineering Corporation (CMEC) and China Non-Ferrous Metal Industry’s Foreign Engineering & Construction was not acceptable and needed to be reworked.

The board accepted the resignations but said it will continue to work until a new team has been appointed. It also asked management to continue the talks with the consortium to improve its offer.

The board said in a statement it has agreed with the management that all employees who will be declared redundant on Dec. 31 or later should be paid severance payments.

Aluminij has paid severance payments to 600 of its 900-strong workforce while the remaining 300 workers have been waiting to see the outcome of possible privatization.

Reporting by Daria Sito-Sucic; Editing by Louise Heavens