The news that Arcelor Mittal is leaving Bosnia and Herzegovina has worried many citizens, especially the workers of this company, considering that it is the largest steel producer in our country, which generated about 4 percent of GDP. Instead of an Indian investor based in London, the factory in Zenica and the mine in Prijedor are being taken over by the domestic company Pavgord, owned by Gordan Pavlović. There is still little information in the public domain, and many questions. Among the most important of them – will steel production in Zenica survive and will jobs be retained?
“In accordance with the terms of the transaction, Arcelor Mittal’s shares in the companies Arcelor Mittal Zenica and Arcelor Mittal Prijedor will be sold to the Pavgord group, and all employee jobs will be transferred to the new owner. The company is expected to record an accounting loss of about 0.2 billion US dollars, excluding sales proceeds.”
The letter from Mittal’s corporation stated that through analysis they found that the sale was the best solution. In the last two years, which will also be the last period of Mittal’s business in Zenica, a loss of around 270 million marks was recorded. On the other hand, the workers were not informed about this business move until the end of the process.
“What we received at the meeting on Friday is that it is like a drop in the ocean from all the steel mills in the world. There has been no profit for the past few years and the corporation has decided to withdraw from the country. Everything that was and will remain in the process will remain the same, except that we have information that Gordan Pavlović has visions for some new products that Arcelor Mittal has not produced in 21 years,” says Rašid Fetić, president of the Arcelor Mittal Zenica Workers’ Union.
Although an agreement has been signed between Arcelor Mittal and the Pavgord company, which already owns Alumina Zvornik and the bauxite mine in Milići, certain conditions on permitted market concentration from the state Competition Law must be met before these companies can merge.
“With this acquisition, they would become leaders in steel production in BiH and that could mean the creation of a monopoly position on the market. The contract has been signed, whether the Competition Council will give its consent to the acquisition remains to be seen,” explains Kenan Mujkanović, president of the ZDK Metalworkers’ Union.
What everyone is particularly concerned about is the fate of the workers, and there are around 2,000 of them in the Zenica-based company. Since last month, they have also concluded a new collective agreement through which their salaries have been increased by around 16 percent and working conditions and other benefits have been defined.
“All employment contracts are transferred to the new employer and the current collective agreement remains in force until a new one is concluded. Whoever comes as the new owner and employer – is obliged to respect the collective agreement,” notes Mujkanović.
The Federation Government, which has a minority stake in the company, has not commented on this issue. However, the key question is under what conditions the sale was made, given that the public never had access to the first contract when Mittal arrived in BiH. The matter is further complicated by the fact that the environmental permit review process for Mittal’s still-existing Zenica facilities is ongoing.
“It depends on whether the factory will be able to continue operating, whether the potential buyer is aware of this, and whether the Federation Government is prepared to declassify the first privatization contract, which probably contains provisions regarding arbitration and costs. These are all questions for the Federation Government,” warns Samir Lemeš, president of the Board of Directors of the Zenica Eco Forum.
In addition to the issue of workers’ rights, the survival of jobs, and generally integral steel production in Zenica, the future heating of the city is also an issue, given that Arcelor Mittal is also the majority owner of the heating plant, which is located within the current factory. The answers to all these questions should be known by October, when the acquisition is expected to be completed, Federalna writes.
