Bosnia's sole aluminium smelter Aluminij Mostar expects to produce a record 128,500 tonnes of primary aluminium this year, helped by better demand and a return to full capacity in late 2010, its top official said on Wednesday.
"My optimism comes from the recovery of metal prices on the London Metal Exchange, our return to full capacity, as well as growing demand for our aluminium," Aluminij Mostar Acting Manager Ivo Bradvica told Reuters in an interview.
Aluminium prices on the London Metal Exchange （LME） were last indicated at $2,430 a tonne. They rose around 10 percent in 2010.
The smelter, located in the southern town of Mostar, produced 118,000 tonnes of aluminium last year when it restored full output. This was 10 percent up from 2009, when it had been forced to cut output by a quarter after the global economic crisis slashed demand for the metal.
Bradvica said last year had been a difficult one for the company, leading it to post a 16 million Bosnian marka （$10.9 million） pre-tax profit loss in 2010. He blamed the loss, the first since the facility was modernised, on factors such as high electricity prices and raw material import costs.
EXPENSIVE POWER
Aluminij has often complained over high power prices and urged the government to help it get cheaper power arguing that power prices account for 60 percent of the cost to produce one tonne of metal. Bradvica said this was much higher than the European standard.
Energy outside top producer China typically accounts for around one-third of aluminium smelting costs.
Bradvica said Aluminij plans to modernize its technology and production which would enable it to boost output further to 135,000 tonnes per year.
He said 45 million marka would be invested in planned projects in 2011 and Aluminij would most likely turn to international lenders to help it proceed with the plan.
"The modernization would be financed at favorable terms and help us achieve technological improvement, more savings and higher output," Bradvica said without elaborating.
He expected Aluminij to return to profit of 5 million Bosnian marka in 2011.
Bosnia's Muslim-Croat federation cabinet annulled last June a tender for the sale of a majority stake in Aluminij after the top bidder, the Swiss-based commodities trader Glencore International AG, had set cheap power supplies as a condition which the cabinet was unwilling to meet.
Aluminij is among Bosnia's top exporters, with much of its output destined for construction and car industries in the European Union.
Bosnia's aluminium exports in January-November 2010 amounted to 390 million marka, or close to 40 percent up from the same period of 2009, when the metal sector was hit by the economic crisis. Aluminium accounts for about a fifth of the Balkan country's overall exports. （$1=1.46 Bosnian marka）
Source Reuters - Balkans.com.
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