July 26, 2013 / 10:48 AM / 5 years ago

Bosnia's Aluminij agrees power supply deal with Slovenian trader

SARAJEVO, July 26 (Reuters) - Bosnia’s aluminium smelter, Aluminij Mostar, which has struggled to keep going due to high electricity costs, said it has secured an advantageous 100 megawatt (MW) power supply deal for the rest of 2013 with Slovenian electricity trader GEN-I.

“The price agreed with GENI-I, including the transmission cost, will be lower from any contract we have had so far,” Aluminij General Manager Ivo Bradvica said in a statement on Friday. The company did not disclose the price.

The deal will help Aluminij, in the southern town of Mostar, continue production after it had threatened in June to halt operations due to high power costs and low metal prices.

It marks the first time Aluminij, Bosnia’s only aluminium smelter, has bought power on the open market. Bosnia’s state-run power utility EPHZHB supplies it with an additional 125 MW of electricity at 49.3 euros ($65.25) per megawatt-hour (MWh).

Aluminij accounts for more than half of the country’s metals output and its potential closure could have hit thousands of jobs across the Balkans, where many aluminium processors rely on its supplies.

The smelter has repeatedly urged the government to subsidise the price of power, which accounts for more than 60 percent of the cost of producing a tonne of aluminium. The plant produces around 160,000 tonnes of aluminium a year.

On June 17, the government of Bosnia’s Muslim-Croat federation struck an ownership structure deal with the smelter, under which the state and Aluminij’s shareholders each hold a 44 percent stake in the firm while the remainder is owned by the Croatian government. ($1 = 0.7555 euros) (Reporting by Maja Zuvela; Editing by Michael Kahn)

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