THE EDGE OF SURVIVAL Without support of the Government, Aluminij will fail to survive

Aluminij Mostar

An article in which journalist Zoran Krešić, in today's edition of Večernji list, is discussing the new state of affairs of Aluminij d.d. Mostar, which was published under the title "Without the support of the Government of FBiH Mostar Aluminij will fail to survive the growth of price of alumina and electricity", we transfer in full:

Aluminij's CEO Drazen Pandža has sent a dramatic letter to Fadil Novalić, Prime Minister of the Government, and Vice-President and Finance Minister Jelka Milićević and Departmental Minister Nermin Dzindić, warning that this company is in serious problems due to global disruption and neglection of the state and has called for support for the survival of this Herzegovinian giant on which destiny of 10,000 depends. Literally this information for Večernji list was confirmed by the director, stating that the US trade war with the EU and the rest of the world led to unbelievable disturbances on the exchanges on which Aluminij depends, because it sells metal and buys all its raw materials, which, with the rise in electricity prices, makes continuation of business impossible. The additional blockage of Rusal's electrolysis (the clash of the Russia and the USA) has led to an extremely high and unbearable price for most electrolysis in the world. These parameters cannot be influenced, but the FBiH, which is also a co-owner of 44 percent of the shares, could create an environment to overcome this crisis.

- This means differentiated electricity prices, different amounts of household and industry fees, sharing of transport charges between exporters and importers, reducing incentives to export energy products and introducing strong measures to stimulate the development of the real sector. We have come to the point of a break when the involvement of the Government of FBiH in this issue is the only way out, because there is no room for manoeuvre on that plan, and if there is no change to what I have mentioned, we cannot continue - Pandža is explicit. Although the price of aluminium at the London Stock Exchange (LME) in July 2018 was by 195 US dollars higher than in the same month last year, the price comparison of three of the key Aluminij's raw materials at the same time led to so much disproportions that the Mostar factory instead of profit due to the metal price increase, suffered a loss due to a cost of raw materials in total of KM 5.2 million and literally loses on every tone of manufactured metal. In July, the price of silicon was $ 190 a ton higher than last year, when it was $ 307 per ton, and the price of petrol coke was $ 515 per ton, while last year it was $ 385 per ton. It should be added that the price of electricity, with fees, exceeded the tremendous 70 euros per MWh.

Neighbouring countries have therefore protected their aluminium industry. Montenegro has provided favourable electricity prices for a three-year period, and Romania fully frees ALRO from the fee for renewable energy sources, in BiH we have positive examples only in the RS, where the industry operates at differentiated electricity prices. In addition, solely for compensation of state regulators, renewable energy sources and other fees, Aluminij pays 24 million of KM.

Pandža emphasises that in the first half of 2018, BiH has exported a record 331 million KM of electricity, while, at the same time, domestic industry is importing electricity. There is no time for the Mostar's company. Decisive decisions are needed for its life.

- Unfortunately, the situation is changing to worse from day to day. We are convinced, given the understanding and the help we have so far given to, that the leaders of the entity authorities will recognize the seriousness of the moment and realize that no one of us has the luxury to contemplate what is happening. There is no time, for the sake of Aluminij and the entire country that would be directly affected by the bad situation of our vast company - said Pandža. Besides the Government of FBiH, the shareholders of this company are "small" workers with 44 percent and the Government of Croatia with a share of 12 percent

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Aluminij Mostar
Corporate Communications