Kosovo city mines a dream

Lead-, zinc- and silver-rich Trepca split along legal and political lines in divided city of Mitrovica

Mitrovica’s Trepca miners work in underground tunnels. Nazmi Mikullovci puts the value of the minerals beneath the ground here at 10 billion euros ($12.8 billion) but a river running through the area marks a rift so deep they cannot help the Balkans’ newest state.

By Adam Tanner - Reuters

MITROVICA - Nazmi Mikullovci puts the value of the minerals beneath the ground here at 10 billion euros ($12.8 billion) but a river running through the area marks a rift so deep they cannot help the Balkans' newest state.

The Trepca mines are a lossmaking mountain of debt, environmental damage and legal tangles straddling a disputed border between Serbia and Kosovo, the ethnic Albanian-majority republic which declared independence from Serbia in February.

The muddied brown water of the Ibar River marks that border.

Yesterday, a mission of 1,900 European and American officials started arriving to foster peace and stability under a United Nations plan.

Such stability could help revive the mines, a vast complex of lead, zinc and silver that in the past was a font of Yugoslav export revenue and employed 23,000 people.

With mining operations mostly halted during the 1998-99 Kosovo war, many of its factories and warehouses now lie abandoned, a jumble of rusted conveyor belts, pipes and cracked windows where weeds grow tall.

Across the river, half the complex lies in similar disrepair in the northern half of Mitrovica, run by Serbs. Albanian Kosovars rarely venture there to face the Serbs' bitter opposition to independence.

Mikullovci, a 65-year-old ethnic Albanian who directs the south side, has not crossed to the northern section in six years. «It is strange,» Mikullovci said. «In 2002, the last time I was in the north part of Trepca, I had problems, and they asked me so as to avoid future problems not to come again.» In the past Serb and ethnic Albanian miners cooperated, and experts say they could do so again if the mission - overseen by the European Union in Kosovo up to the Ibar River and by the United Nations in Serbian areas - helps to ease tensions.

«Given the right circumstances, they can work together,» said Michael Palairet, an honorary fellow at the University of Edinburgh who has written a history of the Trepca mines.

Finding a legal and political basis for the mines would be a significant step for the country, recognized by 53 countries so far but not Russia or Serbia.

Wedged between Serbia, the Former Yugoslav Republic of Macedonia, Albania and Montenegro, its main exports are scrap metal and minerals, along with food.

Unemployment is around 45 percent and corruption widespread. Kosovars make just $1,800 per person annually - a third less than their cousins in neighboring Albania, according to the US State Department.

Economically, the timing for Trepca could hardly be less propitious. Industry experts say it is the world's third-largest mining region for lead, zinc and silver, but, as the world economy slows, prices for metals have slumped.

Silver has more than halved from its peak, zinc has fallen more than 60 percent this year and lead is worth less than a third of its value at the height of the commodities boom. «This year, we have faced many problems because of the prices on the world market,» Mikullovci said, adding the Trepca mines face a 1.2-million-euro loss in 2008, excluding labor cost subsidies. «The situation at the moment is not sustainable.»

Last year the mines broke even thanks to a 3-million-euro Kosovo government subsidy; the north side gets Serbian subsidies, said Mikullovci.

The south mines are running at a fraction of former capacity, extracting 7,000 tons of zinc concentrate a month, 4,000 tons of lead concentrate and 4,000 kilograms of silver a year, Mikullovici said. The north side produces similar amounts. Mikullovci estimates the mines' debt at 50-250 million euros, a hazy number as many past claims are disputed.

Environmental cleanup costs could add another 120-180 million euros, according to international officials based in Kosovo. Updating technology for major future operations could cost another 100-500 million euros.

Its ownership is tangled too. A socially owned firm under a Yugoslav-era designation, the company is under government protection as it reorganizes. Even its name, «Trepca Under UNMIK Administration» is a reference to the local UN force. «It's like a Latin American soap opera on television - it's a very long story,» said Mikullovci.

«You've got, obviously, economic problems... technical and engineering problems... and political problems,» said historian Palairet. «It's going to be a wonderful job for lawyers.»

For the mine itself, some see no immediate hope. «This global economic crisis discourages potential investors,» south Mitrovica Mayor Bajram Rexhepi, Kosovo's first elected postwar prime minister, told Reuters.

«I don't think Trepca has a perspective for more than five or 10 years. They try to present it as a success story but in reality it was not. People live with the illusion and dream that Trepca will be profitable again,» he said.

Over on the Serb side of the river, Marko Jaksic, an influential Serb nationalist hospital director, is equally blunt: «If I were a businessman, it would be the last place I would invest my money.»

Mikullovci acknowledges the difficulty but - as he must - sees a way forward. He believes a swift privatization would help, saying Trepca could be in private hands by end-2010.

Whoever would take on such headaches would make a big difference to the 2,500 or so people who work in the complexes.

More than half of them are in the south and earn around 236-325 euros monthly.

As they head in thick rubber boots and helmet lamps for an elevator ride down, the aging work force entering the south mines passes under a large sign in Albanian: «Good Luck.»

OSLO (AFP) - Kosovo's independence, which has been recognized by some 50 countries, is «irreversible» despite continued strong opposition from Serbia and Russia, Nobel Peace Prize winner Martti Ahtisaari said yesterday. «The process is irreversible,» the former Finnish president and career diplomat, who was deeply involved in the negotiations on Kosovo's status, told reporters in Oslo a day before he was to receive his Nobel prize.

«Kosovo is independent; it will remain independent. It has been recognized by over 50 countries but, more important, countries which represent, I think, 65 to 70 percent of the world economy,» he said, adding that he expected more nations to join the list.

Ahtisaari, 71, who has spent 30 years helping end conflicts in trouble spots around the world, played a key role in bringing an end to hostilities in Kosovo in 1999. At the end of 2005, he was appointed the United Nations special envoy for talks on Kosovo, but failed to clinch an agreement between Belgrade and Pristina.

«I hope that we can get Kosovo into international financial institutions as fast as possible,» Ahtisaari said. As for the Serbs, the Finn said that before they could enter the EU, «they have to be able to live with their past and recognize themselves that something went terribly wrong, among other things, in their relationship with Kosovo.»