Bosnia's regional government annulled a tender for a majority stake in its sole aluminium smelter as top bidder Glencore International AG set terms the cabinet was unwilling to fulfill.
The Muslim Croat federation cabinet said in a statement that the government has decided to declare failed the tender for the sale of an 88% stake in Aluminij Mostar. The minimum price for the stake, equally owned by the federation government and small shareholders was set at EUR 76.8 million. The Swiss based commodities trader had set cheap power supplies as a condition for the bid.
The government refused to provide cheap electricity prices arguing Aluminij was a qualified buyer that can purchase power under commercial prices. It however pledged to guarantee that the company would get needed power quantities. The sell off talks have also been stalled over environmental and ownership issues. The government has been extending the deadline for Aluminij Mostar privatization since 2007 to give more time to the best bidder to resolve outstanding issues.
The smelter produced 96,000 tonnes of primary aluminium in 2009, down from 123,000 tonnes in 2008 after cutting output by a quarter last year but it gradually started returning to full production last autumn. Its revenues and exports fell by a third in 2009 to close to BAM 138 million and BAM 260 million respectively.
Sourced from Reuters
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