Bosnia seeks to avert closure of top exporter Aluminij

Authorities in Bosnia sought to avert the closure of the country's top exporter, aluminium smelter Aluminij Mostar, on Thursday with a deal to settle its ownership structure and redundancy issues.

Officials said the agreement could be inked on Monday, although negotiations appeared to be ongoing.

The smelter in the southern town of Mostar announced last week it would begin shutting down due to high power costs and low metal prices, leading to thousands of job losses and dealing a blow to Bosnia's moribund economy.

Aluminij is the mainstay of Bosnia's metals sector, which accounts for more than half of national output.

Under the deal, the government of Bosnia's autonomous Muslim-Croat Federation and Aluminij's small shareholders will each take a 44-percent stake in the plant.

The remainder will stay with Croatian TLM, which injected $9 million in 1997 to restart production after Aluminij was destroyed in Bosnia's 1992-95 war.

The agreement would also set principles to resolve the issue of severance for around 3,500 former employees, mainly Bosnian Muslims, who were laid off after the war.

"Things are moving in a positive direction and I hope that we shall reach a reasonable, smart and good solution," said Aluminij general manager Ivo Bradvica.

Energy Minister Erdal Trhulj said the government had no sway over the price of electricity supplied to the plant, but that it would consider providing subsidies.

"After the signing of the agreement on Monday, the conditions will be in place for the government to register the ownership structure in the securities registrar over the next 10 days," Trhulj said.

After the Bosnian war, the previously state-owned smelter distributed 64 percent of its shares to its mainly Bosnian Croat employees as compensation for unpaid wages.

It then sold a 12 percent stake to TLM.

The Muslim-Croat Federation disputed the privatisation but Aluminij has resisted returning the state's stake.