ArcelorMittal or IIG? Bosnian iron ore mine for sale

Bosnian Iron ore mine for sale

The largest steel producer in the world, ArcelorMittal has said to Bosnia’s officials it will take legal action, to protect its ownership rights. If they decide to sell government-owned stake in the Ljubija iron ore to the opposite buyer.

ArcelorMittal owns a steel plant in Zenica. Which is located in central Bosnia. There it processes iron ore from the mines it owns in Prijedor in the north of the country.

Then, it also owns 35.1 percent in the Ljubija iron ore mine. Government of Bosnia’s autonomous Serb Republic has a 64.9 percent stake in this mine. And it is put up for sale.

The ArcelorMittal has offered to buy out the government’s stake in the Ljubija mine. Meanwhile the government already decided to sell it to rival customer. Israeli Investment Group (IIG). Explaining that the IGG proposed higher price and  also promised bigger investment.

The decision

Parliament will bring final decision about the sale on Tuesday. Still it is not comprehensive if they will have the major backup.

Lakshmi Mittal, ArcelorMittal CEO has consigned a letter to the Serb Republic government. There he “emphasized the very serious negative impacts for jobs and the economies of both Prijedor and Zenica.” Which will happen if they confirm the offered sale of the Ljubija mine stake to IIG.

“The letter also gave notice of our intention to protect our contractual rights by all means possible, if necessary through legal action in the appropriate international courts.” (Reuters)

When asked about this, Milorad Dodik said that he hadn’t yet received the letter and refused to comment. IIG also, wasn’t available for comments on this matter.

Dodik is The President of Serb Republic in Bosnia who supports the sale to the Israeli group.

Arcelor Mittal workers

AM Prijedor employs 850 workers. It has invested 117 million Bosnian marka ($65 million) in the mines over the past 12 years. Its steel plant Zenica employs about 2,400 workers.

Biju Nair, ArcelorMittal Zenica’s CEO stated that if they sell Ljubija mine to a rival bidder,  Zenica plant would switch to a different production system. And that wouldn’t be convenient for the iron ore from Ljubija. It could also lead to job losses at both Prijedor and Zenica.

“A new owner could threaten the supply of iron ore from Prijedor at commercially acceptable prices. If so, we can change to production without iron ore, using the Electric Arc Furnace.” (Reuters)

Opposition parties in Bosnia, as well as ArcelorMittal Prijedor trade unions, are against the sale to the IIG.

Protests in Prijedor & the budget deficit

Today, police in Prijedor interdicted AM workers protests against the sale to the IIG. They already protested last week in Banja Luka.  When the parliament was discussing the decision on the sale.

The regional government wants to go ahead with sale, cause it has a huge budget deficit. And the IMF stopped its cash payouts to Bosnia. Because of the reform delays.

“Israeli-Russian-Kazak-African investment group” offered 92 million Bosnian marka for the mine, and promised a 65 million marka investment over the next couple years.

ArcelorMittal has offered 63.6 million marka and investment of 63 million marka over the next 10 years.