Despite overtures from Emirates Global Aluminuim PJSC and an infusion of cash from Glencore plc, Bosnian smelter Aluminij d.d. Mostar made the decision to shutter the plant and file for bankruptcy yesterday.
Wire services reported that the plant was removed from the power grid just after midnight Wednesday morning due to the firm’s substantial outstanding unpaid electric bills, which the firm says it was unable to pay due to high alumina prices and weak aluminium prices.
Bosnian-Croat Federation energy minister Nermin Dzindic announced that the firm would file for bankruptcy yesterday, but it was not immediately clear whether that bankruptcy would be a restructuring of debt or would result in liquidation of the firm.
“What we need now is a detailed analysis that will show if it is possible to restructure Aluminij into a company that will be self-sustainable and capable of operating under market conditions,” he explained.
Dzindic continued by noting that his government requested a report from Aluminij on the wider impacts of the plant’s closure.
Yesterday’s closure imperils up to 10,000 jobs in and around the plant. The plant’s union representative Romeo Bioksic said union members would receive a month’s wages and be sent on unpaid leave until the conclusion of bankruptcy proceedings.
At present, Bosnian state-owned energy firm Elektroprivreda HZHB owns the lion’s share of Aluminij’s US$219 million in debt. The smelter’s deal with EPHZHB to sell it electricity at below-market prices the parties struck in December came to an end last month, prompting the smelter to buy more expensive day-ahead electricity ever since. Meanwhile, the government has shown little inclination to subsidize Aluminij’s power purchases further, citing an untenable burden it places upon taxpayers.
The autonomous Bosniak-Croat Federation is the plant’s single biggest owner, having a 44-percent stake in it. The Croation government holds another 12 percent, with smaller individual shareholders owning the remaining 44 percent.