One of the companies in the defense industry is in serious trouble. Namely, Igman from Konjic has been forced to send part of its workforce on mandatory annual leave, due to the halt in imports of gunpowder from Serbia, which is necessary for production at this Bosnian and Herzegovinian (BiH) company. The management has not commented, and the Federation of BiH (FBiH) government claims it will try to find a solution. However, experts warn that if alternatives are pursued, it will not be a simple task.
Two days ago, news broke of a drop in Igman Konjic’s shares, losing as much as 15 million BAM in just 24 hours after the announcement that part of the production was being halted. Overnight, the company’s market value fell as well. The majority owner, the Federation government, is trying to find alternatives to Serbian gunpowder.
“Not all Igman workers are on forced leave, but a portion of them are; they have contracts, they have jobs. Whatever can be done without gunpowder, they are doing, preparing, and this will continue. Problems exist everywhere, and this seems more like a regional tension and back-and-forth. I wouldn’t want us to enter a phase where we also stop something going from the Federation to Serbia – nobody needs that,” said Nermin Niksic, Prime Minister of FBiH.
Experts in the field, however, warn that alternatives should have been considered earlier. Global circumstances are such that demand for weapons has risen sharply, and for gunpowder producers, the situation is particularly complicated.
“The gunpowder they purchase from Serbia is not of the same quality as some other types, so now you come to the market and buy any gunpowder. Gunpowder is not just gunpowder, because the entire ammunition production is tailored to that type of gunpowder and everything used with it in production. I believe that getting access to the two gunpowder factories in the European Union (EU) will be difficult because the EU has promised to spend 800 billion euros on weapons and equipment, including ammunition,” warned Hamza Visca, a security expert.
Namely, Igman Konjic had previously purchased gunpowder exclusively from the Serbian company Barutana Lucani. Serbia, facing criticism for exporting weapons both to Israel and Ukraine, decided, judging by statements from local officials, to completely halt exports, which evidently affected some companies in BiH.
The halt occurs precisely due to Serbia’s export ban, and the new production stoppage, even partial, comes at a time when Igman cannot boast of positive business results, but rather reported a loss of around 20 million BAM in the first half of the year. Igman employs around 1.300 workers and is of huge importance both for the local community and the economy.
According to media reports, switching to another producer would be neither simple nor fast. There are several reasons: every gunpowder must undergo strict ballistic testing, which can take months; the European market is already affected by a shortage of gunpowder due to high demand; and export licenses are subject to political decisions, especially if they involve countries outside the EU. Experts say the current situation should serve as a lesson to pay more attention to the defense industry.
“We haven’t invested in production expansion for a long time, and for a long time we haven’t even assessed our own needs for certain elements of the defense industry,” said Visca.
As an example of quality production in the defense sector, the BiH Minister of Defense, Zukan Helez, cites Binas from Bugojno, which he visits frequently. In an interview, he said he recently discussed gunpowder needs with the company’s management and announced the possibility of domestic production.
“I asked them, Do you have a backup option? A serious entrepreneur always has options A, B, and even C. There must be a backup option. They said they were so sure that they didn’t have one, but now they have found a backup option. And it has already begun; I think a few million has been invested in a gunpowder facility in BiH, and we will have our own gunpowder factory,” said Helez.
Domestic production of gunpowder sounds promising, but it cannot be realized overnight, which is not a solution for the current Igman Konjic workers who have been forced to leave. The fact that BiH does not have a unified defense industry development strategy also does not help. The entities pursue separate policies and interests.
