Bosnia alumina plant halts production due to gas supply cut

Bosnia's sole alumina plant, Birac, halted production on Wednesday after the Balkan country's main gas distributor cut supplies to the company over outstanding debts, Birac said in a statement.

"Production at the Birac factory was completely halted after all gas reserves had been exhausted," the statement said. The BH Gas distributor cut supplies to the plant on Tuesday.

Birac, majority-owned by Lithuania's Ukio Bank Investment Group and based in the eastern town of Zvornik, produces mainly alumina, a key raw material for the production of aluminium, and some quantities of zeolite and hydrates used in the chemical industry.

The factory's management said it would hold talks with BH Gas on Thursday to seek a solution for a debt of 22 million Bosnian marka ($13.8 million). Otherwise the plant is at risk of closing for good, Birac warned.

Mines in nearby Milici and Srebrenica, the main suppliers of bauxite to Birac, are also at risk, it said.

Birac has been struggling due to falling prices for aluminium and alumina on the world market and a rise in the price of gas.

It said last week the price gap had cost its operations around 2 million marka a day and that it would have to cut the wages of its 1,900-strong workforce by 10 percent over the next three months.

Struggling to pay its own debt to Russian gas export giant Gazprom, BH Gas has cut off gas to its big debtors including Birac and the Sarajevogas distributing company.

"Unless we pay at least part of the debt, the whole of Bosnia may be left without gas supplies in the following days," BH Gas official Salih Vatrenjak said.