Source: http://www.reuters.com/article/2011/12/ ... IX20111222

Bosnia Aluminij to end '11 with small profit

* Aluminij to end 2011 with small profit, expects loss next year

* 2012 output, exports expected at 2011 level

* Privatisation delayed until ownership issue settled (Adds details and background on projects plans, privatisation)

By Daria Sito-Sucic

MOSTAR, Bosnia, Dec 22 (Reuters) - Bosnia's sole aluminium smelter, Aluminij Mostar, will post a small profit this year and expects a loss in 2012 due to lower prices on the world market, General Manager Ivo Bradvica said on Thursday.

"The profit will not be high and I can only say that we shall end the year positively," Bradvica told a year-end news conference in the southern town of Mostar. "We forecast a loss for next year."

Bradvica said the company posted a profit of 4.5 million Bosnian marka ($3 million) in the first half of the year but was hit in the last quarter by a fall in aluminium prices. It had a loss of 13.4 million marka in 2010.

"The price of the metal in September hit its lowest level in 15 years while the prices for power and raw materials remained the same," he said. "A loss next year will be inevitable."

He said he expected the Balkan country's top exporter to maintain 2012 output at this year's 160,000 tonnes level.

"We plan to produce 129,000 tonnes of primary aluminium and 30,000 tonnes of finished aluminium products next year," Bradvica said. This is the maximum output under existing capacities.

But he said the smelter, which is the largest producer of aluminium in the Balkans, should complete an upgrade of its foundry in 2012 which should boost annual output by an additional 30,000 tonnes from 2013.

Aluminij signed a 7 million euro ($9.13 million) deal with Austrian firm Hertwich Engineering GmbH to buy a new melting and casting furnace, for which its long-time partner Glencore International has provided the banking guarantees.

It has also regained control of its 20,000 tonnes per year alumina storage in the Croatian port of Ploce - out of its control since 1992 when the Bosnian war broke out - which should help cut transportation costs for raw materials.

POWER PROBLEMS

Aluminij's priority is to find a permanent solution for its power supplies, Bradvica said. The company was paying too much for electricity and the state should subsidise prices for strategic companies, he said.

He said that gasification of the smelter will be completed by the end of December, and that Aluminij has finalised the project documentation for the refurbishment of its 200 kilowatt power sub-station.

Bradvica said that he expected exports, which were up by more than 20 percent this year, to continue to rise next year.

He said that privatisation of the smelter, delayed for years, would not proceed before the company settles its ongoing ownership dispute with a regional government.

A 2007 agreement between the government of Bosnia's Muslim-Croat federation and Aluminij to set ownership stakes in the company at 40 percent each has expired and Bradvica said the deal is no longer valid.

Croatian company TLM owns a 12 percent stake in Aluminij and small shareholders the rest. ($1 = 0.7664 euros) (Editing by Jon Loades-Carter and David Cowell)

Don't like the title.

2011 was satisfying.
Next year is gonna be really tough (Electrical Industry of Herzeg-Bosnia estimates - I'm not sure on what basis because hydrological conditions depend on the weather and there's no such a thing as the long term w. forecast! -that next year is going to be around 50% poorer than 2011. So electricity prices are going up.). But clearly, it's the same bad story everywhere in the metal industry, especially in aluminium one.

Essentially after years of struggling with electricity prices and infinite negotiations around, Aluminium needs the independent source of energy and that is exactly what general Manager emphasizes as being a priority.

Hence, it is URGENT to build a gas pipeline from Ploce to Sarajevo. Aluminium needs its own thermal power plant.