Bosnia’s sole aluminium smelter to close this month

Bosnia’s sole aluminium smelter, Aluminij Mostar, will close on June 17 to the loss of some 900 jobs at the plant, a major employer in the south of the former Yugoslav state and its biggest exporter.

About two million tons of aluminium production has been shut down in Europe since the 2008 financial crisis, while global production has grown by about 10 million tons, mostly in Asia and the Middle East, according to Reuters data.

The Bosnian company’s supervisory board said lower metal prices and high power costs for its energy intensive production meant the plant was condemned to generate losses after it showed a 65.8 million marka deficit last year.

"The decision was passed unanimously after the financial results in the first four months showed the smelter has been posting a monthly loss of 9.7 million Bosnian marka ($6.5 million," its General Manager Ivo Bradvica said in a statement.

Alumnij Mostar sells most of its aluminium into the depressed European construction and auto industries. It has repeatedly urged the government to subsidise the price of power, which accounts for more than 60 percent of the cost to produce a tonne of aluminium.

"This is the only reasonable decision. I could not allow the plant to end up in bankruptcy," said Bradvica, adding that the management will draft a lay-off plan by June 20.

The plant produces around 160,000 tonnes of aluminium a year and has a 2012-14 deal with trading and mining giant Glencore International for deliveries of alumina to Aluminij and of aluminium to Glencore.

Metal sector exports account for more than a half of overall output in Bosnia and a number of small domestic processors were reliant on Mostar as a supplier. The Bosnian economy has struggled to develop since the end of the 1992-95 war and unemployment last year was an estimated 28 percent. ($1= 1.490 Bosnian marka)