Podgorica Aluminium Plant
Encyclopedia
Podgorica Aluminium Plant (Montenegrin
: Kombinat Aluminijuma Podgorica - KAP) (MNSE
: KAPG) is an aluminium processing plant
, located on the southern outskirts of Podgorica
, Montenegro
.
ore were discovered near Nikšić
. With the support from Pechiney
, construction of KAP began in 1969, while production of aluminium began in 1971.
The KAP produces its own alumina, extracting it
out of the bauxite shipped from Nikšić
bauxite mine. The factory also has its own production of pre-baked anodes. The smelter has an installed capacity of 120,000 tons of liquid aluminum per year.
KAP is connected by railway with bauxite mines near Nikšić and the Port of Bar
, and the Podgorica Airport
is only a few kilometers away.
The plant had its most difficult times during UN-imposed economic sanctions on FR Yugoslavia. During the sanctions, the production was reduced to 13% of capacity. In the period 1997–1999 KAP participated with 8,2-6,7 % in GDP of Montenegro, and 65-67 % in export for the same period. Most of the time, the KAP acquired necessary raw materials and spare parts from Glencore
. The entire export was also conducted by Glencore. The company was one of the few Montenegrin companies to recover after the breakup of Yugoslavia
.
On December 1, 2005, KAP was privatized – 65.4394% shares were sold to Salomon Enterprises Limited (later renamed CEAC – Central European Aluminum Company), company based in Cyprus
. However, SEL - CEAC is fully owned by [En+ Group], and even the negotiations on the sale were conducted directly between Oleg Deripaska
and the then Prime Minister of Montenegro
, Milo Đukanović.
. KAP's red mud
pond is notorious for its dry red dust, that is spread by the winds across the villages in Zeta.
KAP is also criticized for consuming most of the electrical power of Montenegro at low prices, while Montenegrin citizens face frequent shortages of electricity and pay for it at much higher prices.
Various political entities, most notably Movement for Changes
, had pointed out that selling the KAP was a bad deal for the state of Montenegro. Arguments are that KAP was underpriced, and that the new owners have suspicious business practices, such as reporting constant annual losses, in order not to pay off dividends to the minority shareholders.
KAP's trade union
has launched strikes frequently since privatization, demanding increases in wages. Strikes unfold in a tense atmosphere, as the KAP management hired a private security company whose armed personnel supervises the strikes.
. The low trading price of aluminium, and expensive production inputs, primarily the electricity and alumina production, have resulted in KAP generating daily losses of up to € 200,000. The EPCG, Montenegrin national electricity supplier, has threatened to cut off the electricity supply of KAP, as a result of ongoing debt, but has backed off in the last moment. KAP management is looking to Government of Montenegro
for support during the crisis, as the company accounts for the large portion of country's GDP, and almost the majority of its export. The fate of KAP may ultimately be decided in 2009, as it is yet uncertain will the government back it up with further subsidies, which may be a key matter for KAP's survival.
Montenegrin language
Montenegrin is a name used for the Serbo-Croatian language as spoken by Montenegrins; it also refers to an incipient standardized form of the Shtokavian dialect of Serbo-Croatian used as the official language of Montenegro...
: Kombinat Aluminijuma Podgorica - KAP) (MNSE
Montenegro Stock Exchange
The Montenegro Stock Exchange is a stock exchange located in Podgorica, Montenegro. It is Montenegro's only stock exchange.The MNSE was founded 1993, and is a member of the WFE, FESE and FEAS...
: KAPG) is an aluminium processing plant
Aluminium smelting
Aluminium smelting is the process of extracting aluminium from its oxide alumina, generally by the Hall-Héroult process. Alumina is extracted from the ore Bauxite by means of the Bayer process at an alumina refinery....
, located on the southern outskirts of Podgorica
Podgorica
Podgorica , is the capital and largest city of Montenegro.Podgorica's favourable position at the confluence of the Ribnica and Morača rivers and the meeting point of the fertile Zeta Plain and Bjelopavlići Valley has encouraged settlement...
, Montenegro
Montenegro
Montenegro Montenegrin: Crna Gora Црна Гора , meaning "Black Mountain") is a country located in Southeastern Europe. It has a coast on the Adriatic Sea to the south-west and is bordered by Croatia to the west, Bosnia and Herzegovina to the northwest, Serbia to the northeast and Albania to the...
.
Overview
Construction of an aluminium smelter in Montenegro was first proposed in the 1960s, when significant quantities of high quality bauxiteBauxite
Bauxite is an aluminium ore and is the main source of aluminium. This form of rock consists mostly of the minerals gibbsite Al3, boehmite γ-AlO, and diaspore α-AlO, in a mixture with the two iron oxides goethite and hematite, the clay mineral kaolinite, and small amounts of anatase TiO2...
ore were discovered near Nikšić
Nikšić
Nikšić is a city in Montenegro . In 2003 the city had a total population about 75,000.Nikšić is located in Nikšić plain, at the foot of Mount Trebjesa. It is the center of the municipality , which is the largest in Montenegro by area...
. With the support from Pechiney
Pechiney
Pechiney SA was a major aluminium conglomerate based in France. The company was acquired in 2003 by the Alcan Corporation, headquartered in Canada...
, construction of KAP began in 1969, while production of aluminium began in 1971.
The KAP produces its own alumina, extracting it
Bayer process
The Bayer process is the principal industrial means of refining bauxite to produce alumina .Bauxite, the most important ore of aluminium, contains only 30–54% alumina, Al2O3, the rest being a mixture of silica, various iron oxides, and titanium dioxide. The alumina must be purified before it can...
out of the bauxite shipped from Nikšić
Nikšić
Nikšić is a city in Montenegro . In 2003 the city had a total population about 75,000.Nikšić is located in Nikšić plain, at the foot of Mount Trebjesa. It is the center of the municipality , which is the largest in Montenegro by area...
bauxite mine. The factory also has its own production of pre-baked anodes. The smelter has an installed capacity of 120,000 tons of liquid aluminum per year.
KAP is connected by railway with bauxite mines near Nikšić and the Port of Bar
Port of Bar
The Port of Bar is Montenegro's main sea port. It is located in Bar.-History:The Port of Bar was used as a sea port for Scutari before it was conquered by the Turks in 1571....
, and the Podgorica Airport
Podgorica Airport
Podgorica Airport is an international airport located south of Podgorica, Montenegro. It is the main hub for Montenegro Airlines....
is only a few kilometers away.
The plant had its most difficult times during UN-imposed economic sanctions on FR Yugoslavia. During the sanctions, the production was reduced to 13% of capacity. In the period 1997–1999 KAP participated with 8,2-6,7 % in GDP of Montenegro, and 65-67 % in export for the same period. Most of the time, the KAP acquired necessary raw materials and spare parts from Glencore
Glencore
Glencore International plc is a multinational mining and commodities trading company headquartered in Baar, Switzerland and with its registered office in Saint Helier, Jersey...
. The entire export was also conducted by Glencore. The company was one of the few Montenegrin companies to recover after the breakup of Yugoslavia
Yugoslav wars
The Yugoslav Wars were a series of wars, fought throughout the former Yugoslavia between 1991 and 1995. The wars were complex: characterized by bitter ethnic conflicts among the peoples of the former Yugoslavia, mostly between Serbs on the one side and Croats and Bosniaks on the other; but also...
.
On December 1, 2005, KAP was privatized – 65.4394% shares were sold to Salomon Enterprises Limited (later renamed CEAC – Central European Aluminum Company), company based in Cyprus
Cyprus
Cyprus , officially the Republic of Cyprus , is a Eurasian island country, member of the European Union, in the Eastern Mediterranean, east of Greece, south of Turkey, west of Syria and north of Egypt. It is the third largest island in the Mediterranean Sea.The earliest known human activity on the...
. However, SEL - CEAC is fully owned by [En+ Group], and even the negotiations on the sale were conducted directly between Oleg Deripaska
Oleg Deripaska
Oleg Vladimirovich Deripaska is the Russian Chief executive officer of Basic Element company and a member of the Board of Directors and CEO of United Company RUSAL, a Russian aluminium industry company...
and the then Prime Minister of Montenegro
Prime Minister of Montenegro
The Prime Minister of Montenegro , is the head of the Government of Montenegro. The role of the Prime Minister is to direct the work of the Government, and to submit to the Parliament the Government's Program, including a list of proposed ministers...
, Milo Đukanović.
Controversy
Podgorica Aluminium Plant is subject to some controversy and criticism. Although it is the biggest single contributor to Montenegrin GDP and export, it is heavily criticized for polluting the fertile Zeta plainZeta plain
Zeta Plain is a fertile lowland in Montenegro. It stretches from Podgorica in the north to the Skadar Lake in the south. It is the biggest plains area in Montenegro, with an average elevation around above sea level....
. KAP's red mud
Red mud
Red mud is a solid waste product of the Bayer process, the principal industrial means of refining bauxite in order to provide alumina as raw material for the electrolysis of aluminium by the Hall–Héroult process. A typical plant produces one to two times as much red mud as alumina...
pond is notorious for its dry red dust, that is spread by the winds across the villages in Zeta.
KAP is also criticized for consuming most of the electrical power of Montenegro at low prices, while Montenegrin citizens face frequent shortages of electricity and pay for it at much higher prices.
Various political entities, most notably Movement for Changes
Movement for Changes
Movement for Changes is a political party in Montenegro which has a proclaimed goal to integrate their country into the European Union and to support political and economic reforms to bring it into line with European norms...
, had pointed out that selling the KAP was a bad deal for the state of Montenegro. Arguments are that KAP was underpriced, and that the new owners have suspicious business practices, such as reporting constant annual losses, in order not to pay off dividends to the minority shareholders.
KAP's trade union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
has launched strikes frequently since privatization, demanding increases in wages. Strikes unfold in a tense atmosphere, as the KAP management hired a private security company whose armed personnel supervises the strikes.
Financial crisis impact
, the KAP has struggled to survive the impact of ongoing economic crisisLate 2000s recession
The late-2000s recession, sometimes referred to as the Great Recession or Lesser Depression or Long Recession, is a severe ongoing global economic problem that began in December 2007 and took a particularly sharp downward turn in September 2008. The Great Recession has affected the entire world...
. The low trading price of aluminium, and expensive production inputs, primarily the electricity and alumina production, have resulted in KAP generating daily losses of up to € 200,000. The EPCG, Montenegrin national electricity supplier, has threatened to cut off the electricity supply of KAP, as a result of ongoing debt, but has backed off in the last moment. KAP management is looking to Government of Montenegro
Government of Montenegro
The Government of Montenegro is the executive branch of state authority in Montenegro. It is headed by the prime minister. It comprises the prime minister, the deputy prime ministers as well as ministers....
for support during the crisis, as the company accounts for the large portion of country's GDP, and almost the majority of its export. The fate of KAP may ultimately be decided in 2009, as it is yet uncertain will the government back it up with further subsidies, which may be a key matter for KAP's survival.
External links
- (Montenegrin) Official Website
- (Montenegrin) Listing on the Montenegro Stock Exchange