Bosnia's loss-making Aluminij dips into reserves

Loss-making Bosnian aluminium smelter Aluminij Mostar will dip into capital reserves and may cut more jobs, in an attempt to stay afloat while it tries to access international funding.

The general manager of Aluminij, Bosnia's biggest exporter and a major employer, on Friday said he was hopeful that a long-standing ownership row with the government of Bosnia's Muslim-Croat federation could be resolved in the next few days.

That would clear the way for Aluminij to seek finance from organisations such as the European Bank for Reconstruction and Development and the International Finance Corporation, part of the World Bank.

Aluminij, which sells aluminium mainly to the depressed European construction and auto industries, warned last month that it may face closure if it posted a similar or bigger loss this year to the 65.8 million Bosnian marka ($33.6 million) loss of 2012.

Customers include trading and mining powerhouse Glencore International.

General manager Ivo Bradvica said on Friday that the smelter, located in the southern town of Mostar, would cut core capital to around 110 million marka. He declined to give the current level of core capital.

He said the management would also see if there was any scope to cut more jobs from its 817-strong workforce which had already been reduced by 8 percent over the past 18 months.

Pending a deal, the government has also pledged to help Aluminij get privileged status with its main power supplier, the majority state-run utility EPZHB, and to reschedule a 30 million marka debt owed to the utility, he said.

Aluminij has repeatedly asked for state subsidies, saying the price of energy accounts for more than 60 percent of the cost to produce a tonne of metal.

He also said that an upgraded foundry and casting line will go online this month. "If the conditions allow, it will boost output by 30,000 tonnes to a total of 190,000 tonnes a year," said Bradvica.