April 8 (SeeNews) - Israel's M.T. Abraham Group said that its Bosnian subsidiary, Aluminij Industries d.o.o., has signed an agreement with Bosnia's Aluminij, opening the way for restarting production at the ailing aluminum producer.
The deal was signed on April 7, with M.T. Abraham Group engaging in the project together with its partners China Machinery Engineering Corporation (CMEC) and China Nonferrous Metal Industry’s Foreign Engineering & Construction Co., Ltd. (NFC), the Israeli company said in a statement on Tuesday.
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According to the statement, M.T. Abraham Group and its partners will start implementing the strategic plan to restart operations at Aluminij, as outlined in the signed agreement, in due course.
The group provided no details on the production plans.
"Especially due to the present turmoil in the world economy, it was important for us to show our trust in Aluminij and our commitment to the long term goals. We will strive to create a competitive and stable enterprise and we intend to be a major player in the global aluminum industry," the head of M.T. Abraham Group, Isaac M. Tamir, said in the statement.
Earlier this week, Bosnian media reported that Aluminij's shareholders, including the government of Bosnia's Federation, have approved the revised offer by Israel's M.T. Abraham Group and its Chinese partners for a long-term lease of Aluminij's production assets.
In particular, the shareholders adopted a decision on Aluminij signing a business cooperation agreement with M.T. Abraham's Aluminij Industries d.o.o.
According to the media reports, the restart of production is planned to take place in several stages, with the foundry plant going online first and employing some 200 workers, with 80 of them being engaged in the initial stage. Later on, production will be restarted at Aluminij's anode and electrolysis plants.
Last month, local media quoted the Federation's finance minister, Jelka Milicevic, as saying that the entity's government was happy with the latest proposal of the Israeli-Chinese consortium since it has complied with all of its previous remarks and recommendations, including providing of guarantees that the leaseholder will continue production at Aluminij, hire the employees and regularly pay their wages.
The Federation government controls 44% of Aluminij, followed by the government of neighbouring Croatia with 12%, with the remainder owned by smaller shareholders. The Federation is one of two autonomous entities forming Bosnia and Herzegovina. The other one is the Serb Republic.
Aluminij halted operations in July 2019 after its power supply was cut off due to swelling unpaid bills. Following the shutdown, the Federation government decided that Aluminij should continue to operate and come up with a rescue plan by the end of 2019.
M.T. Abraham said in December that its primary objective is to reactivate and stabilise the existing smelter operations, introduce new operational efficiencies, open a new modern production line and enhance management practices in order to ensure long-term stability and profitability.