(Corrects ownership of Ljubija mine, paragraph 3)
By Daria Sito-Sucic and Gordana Katana
SARAJEVO May 15 ArcelorMittal, the
world's largest steel producer, has warned Bosnia's authorities
it is ready to take legal action to protect its ownership rights
if a government-owned stake in the Ljubija iron ore mine is sold
to a rival bidder, the company said on Monday.
ArcelorMittal owns a steel plant in the central Bosnian town
of Zenica, where it processes iron ore from the mines it owns in
Prijedor in the north of the country.
In the nearby Ljubija iron ore mine, the government of
Bosnia's autonomous Serb Republic has a 64.9 percent stake,
which has been put up for sale. Small investment funds own the
The steelmaker has made a bid to buy out a the government's
stake in the Ljubija mine, but the government has decided to
sell it to rival bidder, Israeli Investment Group (IIG), saying
the Israeli group offered a higher price for the stake and
promised more investment.
The regional parliament is expected to decide on the sale on
Tuesday but it is not yet clear if the government will have
ArcelorMittal chairman and CEO, Lakshmi Mittal, has sent a
letter to the Serb Republic government in which he "emphasised
the very serious negative impacts for jobs and the economies of
both Prijedor and Zenica" if the proposed sale of the Ljubija
mine stake to IIG was confirmed, the company said.
"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," the
company said in a statement emailed to Reuters.
Serb Republic President Milorad Dodik, who supports the sale
to the Israeli group, said that he had not yet received the
letter and declined to comment. IIG was not immediately
available to comment.
ArcelorMittal Prijedor employs 850 workers and has invested
117 million Bosnian marka ($65 million) in the mines over the
past 12 years. Its steel plant Zenica, in which it had invested
over 300 million marka, employs about 2,400 workers.
ArcelorMittal Zenica's Chief Executive, Biju Nair, has said
that if the Ljubija mine was sold to a rival bidder, the Zenica
plant could switch to a different production system, which would
not be suitable for the iron ore from Ljubija and this would
lead to job losses at both Prijedor and Zenica.
"A new owner could threaten the supply of iron ore from
Prijedor at commercially acceptable prices. If so, we can
change to production without iron ore, using the Electric Arc
Furnace," Nair said.
Bosnian Serb opposition parties, as well as ArcelorMittal
Prijedor trade unions, are against the sale to the IIG.
On Monday, police in Prijedor banned peaceful protests by
ArcelorMittal workers against the sale to the IIG. The workers,
who are worried about job losses, had already protested last
week in Banja Luka when the parliament was originally due to
vote on the sale.
The regional government wants to go ahead with sale because
it faces a big budget deficit after the International Monetary
Fund halted disbursement of cash under its aid programme for
Bosnia because of reform delays.
IIG, which was presented as an
"Israeli-Russian-Kazak-African investment group" by its director
Evgenij Zotov, has offered 92 million Bosnian marka for the
stake and pledged a 65 million marka investment over the next
ArcelorMittal has offered 63.6 million marka and investment
of 63 million marka over the next 10 years.
ArcelorMittal's local subsidiary ArcelorMittal Prijedor has
exclusive exploitation rights in the mines under an earlier
agreement with the government.
(1$ = 1.798 Bosnian marka)
(Editing by Jane Merriman)