Bosnia’s only operating aluminium smelter and one of the country’s biggest exporters Aluminij Mostar finally closed down its operations on Wednesday midnight after it was disconnected from the power grid. The smelter was under a huge debt of 380 million Bosnian marka (US$218 million) because of higher electricity and alumina costs.
The smelter owed 280 million marka to the state power utility, EPHZHB, which stopped supplying power at a discounted price since June, agreed with the government last December. Since then, the smelter has been buying day-ahead electricity, which is more volatile than long-term power contracts.
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The shutdown on Wednesday followed a failed attempt to find a strategic investor for the company. London-listed miner and commodity trader Glencore backed out from a possible takeover of Aluminij Mostar on Monday.
The smelter shutdown will affect about 10,000 jobs including the regular employees, contractors and those at the aluminium downstream firms it supplies. The smelter employs about 900 people from the southern town of Mostar.
Several hundred Aluminij workers blocked traffic on the road linking Mostar and Sarajevo on Tuesday in a protest over the failure of Aluminij’s shareholders to find a solution for the smelter.
The Federation government has stopped subsidizing the electricity rate for the smelter asking it to buy power on the open market. It has been in talks with several companies about the possible takeover of the smelter.
Aluminij’s management has not yet assessed the financial damage from the power cut-off. It said earlier that shutting down electrolysis cells at the smelter could cost several hundred million marka.
Bosnia’s autonomous Bosniak-Croat Federation owns 44% shares in Aluminij, while small shareholders holding another 44% and the Croatian government the rest.
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