The Government helps KAP aluminum smelter overcome issues

Economy Minister Branko Vujovic signed Tuesday with Vyecheslav Krylov, Chairman of the aluminium smelter KAP Podgorica, a settlement agreement by which the Government becomes an owner of a significant portion of shares in KAP and the Boksiti Mines and helps the majority owner CEAC to overcome the problems brought by the economic downturn. The Government’s intervention will focus on the decision-making process, social and financial issues and guarantees.

The agreement specifies that the Government will own around a 29% stake in KAP and around 31% in Boksiti, which will enable the Government to have one representative each in the two companies’ managing boards, with the right to veto important decisions concerning production, business and investment plans and loans. The agreement requires CEAC to invest EUR 39 million over the next five years (EUR 21 million in the first two), and the investor is expected to put more of the KAP and Boksiti capacity to use, said Minister Vujovic, adding that this should help make KAP more competitive on the aluminium market, attract more investment and help increase production.

According to the Minister, by virtue of this agreement, the KAP and Boksiti restructuring programmes will be adopted and the number of KAP and Boksiti employees will be reduced to slightly over 1,300 and 300, respectively, based on voluntary redundancy and with adequate compensation. This policy already gave results in 2010 with a 20% increase in aluminium production and export in comparison to previous year, and the Government expects an even bigger increase in the next year, said Minister Vujovic.

President Krylov noted that this agreement is very important as it cements the cooperation with the Government in a successful way, underlining that the financial and social issues have been resolved, which has enabled KAP to operate profitably. He emphasised that the most important task – the development of both KAP and Boksiti – has been achieved and that it is now necessary to utilise the advantages of KAP and Boksiti over their competition, such as the proximity of the European market deficient in aluminium products. He added that action in this regard is already being taken and that further steps will be made in the future.