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For sale: bankrupt copper mine, has new bulldozer
Tue Oct 30, 8:26 PM

BOR, Serbia (Reuters) - Once a socialist success story, Serbia's bankrupt copper mine is now hoping surging copper prices can attract a new owner with cash to reverse the fortunes of the sprawling complex and dusty town beyond.

By Ivana Sekularac

BOR, Serbia (Reuters) - Once a socialist success story, Serbia's bankrupt copper mine is now hoping surging copper prices can attract a new owner with cash to reverse the fortunes of the sprawling complex and dusty town beyond.

In Yugoslav times, RTB Bor had 20,000 employees and sold copper to East and West. But isolation in the war-torn 1990s and zero investment since brought the firm to its knees, burdened with $500 million debts and sky-high production costs.

Despite the boom in copper prices, currently around $7,800 a tonne and five times higher than 2003 levels, RTB is losing $45 million annually.

In the second privatization attempt this year, Serbia has set the minimum price for two surface mines, one underground mine and the smelting and refining unit at $340 million.

"We are a thinking of ourselves as a bride, looking for a groom," said Branislav Mihajlovic, RTB's deputy manager. "Trends in the world copper market have turned RTB from a company with low prospects into a company with a future."

As a measure of its optimism the firm this month bought a new bulldozer -- the first in 25 years.

RTB has ore reserves of over a billion tonnes, confirmed by state reports, Mihajlovic added. Exploiting these would require investment, opening a new pit and restarting an old one that was closed down in 2000.

Five investors are interested, with the deadline for binding bids expiring on Oct 31: Britain's Vedanta Resources, Montanwerke Brixlegg, the copper producer of Austria's A-Tec Industries, Cyprus-based East Point, a Russian fund called Strike Force and Russia's Solvej, which runs several mines in Macedonia.

In RTB's golden era in the 1980s, annual production stood at 140,000 tonnes of copper per year. It fell to 10,000 in the 1990s, when Serbia was punished with sanctions for its role in the Yugoslav wars.

After nationalist strongman Slobodan Milosevic was ousted in 2000 and the country started making tentative steps towards the West, RTB's massive furnaces were again fired up. Production reached 45,000 tonnes in 2006.

"The price of copper was like God's gift," Mihajlovic said. "Without investment in new equipment we would have had to close down the biggest open pit by the end of 2007."

DYING TOWN

The new owner will have to modernize the rusty, creaking complex, and invest in research and development: opening a new mine alone is estimated to cost $180 million.

But hopes for the complex go beyond cash and production figures. The town of Bor, home to 65,000 people, was built around the mine in the early 20th century and was once one of Yugoslavia's richest, a multinational hub buzzing around the company.

As RTB declined the town has suffered: it is now one of Serbia's poorest, and the most polluted.

Old neo-romantic houses, reminders of the French who ran the mine from 1905 to World War Two, stand crumbling next to the miners' barracks.

Nearer to the smelter, piles of barren soil and scrap metal lie by the roadside. The air smells of sulphur and tastes acrid. Workers in the smelting hall where red-hot molten copper ore is stirred in massive vats don't even wear masks.

RTB's technology is 80 years old, and considered obsolete in most European countries. In a recent study the World Bank said the high levels of pollution in the air, earth and water made the environment the region's biggest problem.

Despite the hardships, 26-year old Asim Alijevski said he was happy to find a job in the complex.

"I finished high school eight years ago and this is my first job," he said. "I get 20,000 dinars ($370) every month and I am very happy to be given the opportunity to work."