ECONOMY

Indian steelmaker goes for Bosnian coking plant

SARAJEVO (Reuters) – Indian steel company Ispat Group signed a deal with authorities in northern Bosnia yesterday to form a joint venture with the Lukavac coking plant, a government official said. Ispat Group Global Infrastructure Holding will invest 77.5 million Bosnian marka ($45.4 million) in a new company named Global Ispat Koksna Industrija Lukavac. The coking plant will invest its assets, Mustafa Burgic, the minister of industry for the northern Tuzla region, told Reuters. «Ispat Global Infrastructure Holding enters into this arrangement with the financial means to start production, while the coking plant provides all units that make up a technological entirety,» Burgic said. Ispat Group will hold a 51 percent stake in the new company, while the State will hold the rest. The London-based Ispat has expressed an interest in buying a majority stake in Bosnia’s biggest steel mill, BH Steel, two mines and the Lukavac plant. Officials from Bosnia’s two regions, the Muslim Croat Federation and the Serb Republic, confirmed they were in talks with Ispat about the sale of BH Steel and the mines. Ispat has been granted exclusive status until December 1 to make an offer, after which other investors would be treated equally. LNM Group has also expressed an interest in the assets. Ispat’s representative has told Reuters that the acquisition of a majority stake in the Bosnian-Kuwaiti joint venture BH Steel would only make sense along with purchase of the iron ore mine in Ljubija, a limestone mine in Doboj and the Lukavac plant. Out of a 77.5-million-marka investment, 15 million will go to the completion of the so-called Fifth Coke Battery, 50 million will be used as working capital and 12.5 million marka will cover the plant’s debt, Burgic said. The Lukavac coking plant stopped working earlier this year after it clinched a joint venture deal with a German company. But the contract was annulled last month as the German partner’s investment promises failed to materialize. Burgic said production could resume next May when the new battery is completed, adding that debts to workers would be rescheduled for four years and covered by the profits of the new company. He said that Ispat pledged the first 2 million Bosnian marka yesterday and that an additional 8 million marka would be released by December 1, after the new company’s registration.