July 8 (SeeNews) - The negotiations between the government of Bosnia's Federation and British-Swiss company Glencore on saving ailing aluminium producer Aluminij have failed, local media reported on Monday.
The energy minister of the Federation entity Nermin Dzindic said that at a meeting on Monday the representatives of Glencore have changed their mind regarding the proposal made last week to take over Aluminij if the Federation government committed to a fixed electricity price of 50 euro ($56) per megawatt hour for the cash-strapped company by the end of the year, news wire Klix.ba reported.
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After changing their original proposal, Glencore withdrew from the talks, Dzindic was quoted as saying.
He said the government will continue the negotiations with the remaining interested investors, including Emirates Global Aluminium (EGA) who declared last week their interest in drawing a plan for the recovery of Aluminij, and an unnamed global corporation which has just indicated its interest in the Mostar-based company.
However, Aluminij's power supply is expected to be cut off on Tuesday after Glencore provided last week financing for the purchase of electricity and raw materials for four more days, thus delaying Aluminij's shutdown, which was expected to begin after midnight on Friday.
Aluminij's unpaid bills to Bosbian power utility Elektroprivreda HZHB have reached some 280 million marka ($161 million/143 million euro), according to earlier media reports.
The Federation government, Aluminij's largest shareholder, has been under pressure by potential investors and the company's management to subsidise the electricity price for the aluminium smelter. The government, however, has said it is no longer able of subsidising Aluminij's electricity costs as the price for the taxpayer is too high.
The Federation government controls 44% of Aluminij, followed by the government of Croatia with 12%, with the remainder held by smaller shareholders.
The Federation is one of two autonomous entities forming Bosnia and Herzegovina. The other one is the Serb Republic.
(1 euro = 1.95583 marka)