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Nature · Economy

An abandoned iron ore mine produces crisis

February 18th, 2019
topics:Nature, Economy
by:Katarina Panić
located in:Bosnia and Herzegovina
tags:Ljubija, mine, Mittal

Ljubija is one left state-owned iron ore mine in Bosnia. Although some researchers say there are more than 300 million of iron ore geological reserves, the mine is out of function more than two decades, mostly as a 1990’s Yugoslavia’s war consequence.

ArcelorMittal has been negotiating a purchase of the mine with Bosnia’s autonomous Serb Republic government since 2011. Over the years the process has its ups and downs, producing even political earthquake. It also reopened the missing persons and human rights issues.

It seemed the agony is going to be ended last week. The world’s largest steelmaker was the only one bidding for a stake in Ljubija iron ore mine, however, the bid was rejected over procedural issues. „It is ridiculous. It's like there is a football competition and one says FC Barcelona cannot participate since they are not capable of playing football“, one local ArcelorMittal official told to fairplanet. “Now, I am afraid more than ever the headquarter is going to reduce the production here which leads to reducing the number of employees”, the source added.

Back to 2004, Mittal started to operate in Bosnia through Omarska iron ore mine near Prijedor in the north-west of the country and a steel plant in the central Bosnian town of Zenica, being one of the largest exporters. Seven years later company asked Republika Srpska govt to buy Ljubija mine in the same Prijedor area. It looked logical since the 2004 contract gave Mittal exclusive research and exploitation rights in both mines. The govt appointed the working group to prepare privatization. It turned out one of the group members Evgenij Zotov became Mittal’s rival bidder.

ArcelorMittal chairman and CEO, Lakshmi Mittal, has sent a letter to Republika Srpska government in which he expressed the intention “to protect our contractual rights by all means possible, if necessary through legal action in the appropriate international courts”.

In February 2014 the government has decided to sell the mine directly to Zotov’s Israeli Investment Group (IIG), presented as an Israeli-Russian-Kazak-African consortium. However, one of the ruling parties voted against so there was no majority support in the regional parliament. There were two more attempts, and the outcome was the very same. The leadership of a party who opposed such a decision is from Prijedor. They say the simply wanted to be sure the mine won’t be sold to someone with no experience in mining, no references, no history, no income nor profit (no matter if offers a higher price and promises more investment as Zotov did). Every time its MP’s voted, unlike their coalition partners who run together Republika Srpska since 2006. They also have the opposition parties and ArcelorMittal trade unions both in Prijedor and Zenica on their side. The workers, who were worried about job losses, had protested in May 2017 in Banja Luka when the parliament was due to vote on the sale.

Suddenly, in November 2017 the government decided to remove Ljubija mine from the list of few strategic companies owned by Republika Srpska. It meant that now it can be sold without national assembly consent. Republika Srpska Investment-Development Bank (IDB) was in charge for procedure together with Banja Luka Stock Exchange. The first auction was scheduled for December 17, 2018, but both ArcelorMittal and IIG asked the deadline to be postponed. IDB refused another delay period which Zotov requested again. The second auction took place on January 30, 2019, but it failed.

“ArcelorMittal is disappointed with the decision of the IDB that jeopardises the long-term future of mining in the Prijedor area. Unfortunately, IDB did not accept ArcelorMittal Holdings AG, Zug, Switzerland as a qualified buyer and did not issue a certificate. In addition, IDB RS did not give any explanation or reasons for not accepting the above-mentioned company as a buyer”, the statement reads.

The IDB told media ArcelorMittal did not meet the required criteria and that a new auction would be announced soon. 64.99 percent of the shares were offered for sale at a starting price of 2.0912 BAM per share.

Besides the economic and political background, there are civil society organisation and 1990's war survivors who warn there are several mass graves at the site of Ljubija iron ore mine. They want to have an approach to the mass graves sites and not to be stopped by iron ore production process.

Back to January 11, 1996, less than two months after Dayton Peace Accord signing stopped the war in Bosnia, The New York Times’s published the article “Bosnian Mine Is Thought to Hold Evidence of Mass Killings” with its part on the front page. “The Bosnian Serbs, according to non-Serb miners in the town, are exhuming the remains of victims from numerous mass graves in the area and transferring the bodies to this mine, where they are often mangled in old mining equipment, doused with chemicals and reburied under tons of debris in the open pits”, the NYT story says. “While the exact location of the mass grave site remains unconfirmed, there is much circumstantial evidence that such a grave site exists in the mine area”, it added.

A few years later the mass graves were found: Redak I with 15 bodies, Redak II with 68 bodies and Jakarina kosa with 373 bodies, mostly Bosniaks (Bosnian Muslims) and Croats (Catholics). The prison camp detainees' organization Prijedor 92 believes there are even more mass graves there since there are few hundreds of people still missing.

“We already have an example of former camp Omarska which is also privatized by Mittal. The approach is rarely permitted and upon strict conditions, and it is not allowed to approach all parts of the former camp, even the day we commemorate camps closure”, Mirsad Duratović head of the organization told local media. The company says it is not forbidden to visit the site under its procedure which provides safety for visitors and for workers and which enables the iron ore production keeps going.

Article written by:
Katarina Panić
Katarina Panić
Author
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ArcelorMittal has been negotiating a purchase of the mine with Bosnia’s autonomous Serb Republic government since 2011.
The world’s largest steelmaker was the only one bidding for a stake in Ljubija iron ore mine, however, the bid was rejected over procedural issues.
„Now, I am afraid more than ever the headquarter is going to reduce the production here which leads to reducing the number of employees“.