Tuesday, April 26, 2005
Privatization continues in Kosovo with Ferronikeli plant up for sale
"Ferronikeli"is one of the largest nickel smelting and mining operations in Europe.
By Matthew Robinson
Gllogovce, Kosovo[Kosova](Reuters) - Kosovo's Glogovac ferro-nickel plant looks like a bomb hit it.
Twenty-eight bombs, in fact, dropped by NATO during its 1999 air war to expel Serb forces accused of ethnically cleansing the province's Albanian majority.
Severed pipes hang from the punctured roof, glass litters the floor and drums that once collected waste from the smelter now lie up-turned amid the debris like giant church bells.
"Try to make it look good," the mine's ethnic Albanian technical director says to a visiting camera crew.
Kosovo's United Nations authorities say the damage is purely superficial and have put "Ferronikeli" up for sale, seven years after Serbia closed it down and began using it as a military base in its war on Kosovo's separatist rebels.
Appearances aside, U.N. officials say Ferronikeli and mines like it represent the future for the impoverished province.
The plant is one of the largest nickel smelting and mining operations in Europe, with 13 million tonnes of nickel ore in three open-pit mines valued at around 2 billion euros.
Lured by a potential 100 million euros (68 million pounds) in annual revenue, four international mining companies including South Korea's Samsung Corp are expected to submit bids for it on April 27.
It is the most significant privatisation undertaken by the United Nations since it took control of the Balkan province in 1999. The buyer is obliged to take on 1,000 workers and invest at least 20 million euros over the first 3 years.
FUTURE IN LIGNITE
Kosovo's U.N. overseers hope the sell-off will breathe life into the dormant mining industry, laid low by chronic mismanagement and under-investment in the 1990s.
Kosovo is rich in nickel -- used to produce steel -- and lignite -- a form of coal used to produce power -- but its mines badly need investment. The West plans to decide the province's "final status" later this year, and Kosovo is keen to prove it can become a viable independent state.
"For the long-term sustainable future of Kosovo, the major industry will be mining," says Kirk Adams, the British acting director of privatisation at the Kosovo Trust Agency, KTA.
"It will be a major employer and major source of revenue with a huge and dynamic impact on the economy."
After six years of U.N. micro-management, the province of 2 million people is economically stagnant and unemployment hovers between 50 and 60 percent.
The population, 50 percent of which is below the age of 25, is impatient for change and the streets of Glogovac, 20 km (12 miles) from the capital Pristina, are filled with young men peddling smuggled cigarettes.
The picture is the same in Mitrovica in the north, where the once-thriving Trepca mining complex lies in ruins.
The U.N. hopes a resurgent mining industry can go some way to quelling the impatience that has fuelled bouts of violence against minority Serbs, who want to remain part of Serbia.
A recent report by the World Bank and Kosovo's Directorate of Mines and Minerals, DMM, valued Kosovo's total mine resources at 13.5 billion euros, including 6.5 billion at the Sibovc lignite mine just outside Pristina.
"Kosovo has 40 percent of Europe's lignite, and it's good quality," said Adams. "The lignite reserves mean this should be a power-exporting area for the rest of the region."
The DMM estimates the mining sector needs 1.8 billion euros of investment to become fully operational, providing 35,000 direct jobs and at least the same again indirectly.
As a U.N. protectorate, Kosovo's suspended status means its privatisation process has been dogged by ownership disputes and liability concerns.
The U.N.-appointed KTA has managed to sell only around 30 of the 500 socially-owned companies -- a unique corporate model of the old socialist Yugoslavia -- on its books since May 2003.
But the agency insists most of the problems have been ironed out and there are plans to privatise more of Kosovo's mines.
"Mining is important to Kosovo both historically and in the future," says Adams. "We intend to privatise more mines and they will have a significant impact on jobs and investment in Kosovo.
"Ferronikeli is a very important start." Reuters
You may contact Mr. Adams at:
Kosovo Trust Agency
Special Spin-Off Section
Tel: ++ 381 38 500 400 1261
Fax: ++ 381 38 248 076
You can also see the rules of the tender by going on the following website: