European Parliament Backs En+ Group’s Ownership in Montenegro Aluminium Smelter
25 February 2016 by Staff
The European Parliament’s Foreign Affairs Committee adopted a resolution supporting the findings of the European Commission’s 2015 Progress Report on Montenegro, one of which is to advocate an independent audit over the disputed ownership of the KAP aluminium smelter and nearby bauxite mine in Montenegro.
The Central European Aluminum Company (CEAC), an entity formed by Russia’s En+ Group, said in a press release: “We are heartened by the overwhelming support of the Committee for a sustainable and negotiated solution to the KAP dispute and are particularly encouraged by its call for a full and independent audit into the dispute. The magnitude of that support [50 in favour, 3 against] is testament to how seriously the Committee takes the KAP dispute and the deep corruption within Montenegro, and we urge all members of the European Parliament to give their full support to this strong resolution in plenary session in March.”
KAP, an abbreviation for Kombinat Aluminijuma Podgorica (Aluminium Plant Podgorica), is an aluminium smelting company formed in 1969 in Podgorica, Montenegro. Salomon Enterprises Limited, which was to be renamed Central European Aluminum Company, became majority shareholder in 2005 when the formerly state-owned company privatized. KAP has long been a significant contributor to Montenegro’s GDP, and, as a result, KAP was represented in the negotiations by the then Prime Minister of Montenegro, Milo Đukanović. CEAC, fully owned by En+ Group, who also owns a controlling interest in Russia’s UC Rusal, was represented by Oleg Deripaska.
CEAC invested €200 million in KAP in the intervening years, but, after auditors from Deloitte discovered “various breaches of representations and warranties” of the agreement, the relationship between the Montenegran government and CEAC soured. CEAC then claimed (and the EC’s Foreign Affairs Committee agreed) that it was illegally stripped of assets and removed from KAP’s management positions.