Kombinat Aluminija Podgorica (kap) is located about 10 km to the south of the city of Podgorica, the capital of the state of Montenegro. The site contains (1) the Alumna refinery with Lime plant and the Primary aluminium smelter with small Secondary recovery plant, (2) Strip casting, Cold rolling, Foil rolling, Conversion and Extrusion operations, (3) Wire and Cable manufacturing operations, and (4) Billet casting and Forging plant.
 History of the Plant and Production Record |
The kap aluminium and alumna plant was constructed in 1969-71 under the ownership of the former state of Yugoslavia. The initial capacity of the alumna refinery was 200,000 t/y; this was increased to 280,000 t/y in 1980. The primary smelter contains of two potlines and has a total design capacity of 102,000 t/y. The technology for the refinery and the smelter was supplied originally by Pechiney.
The basic justification for the construction of the complex at Podgorica was the availability within Montenegro of bauxite reserves of good quality, the availability of electric power, principally generated at hydro electric stations, and easy access to the port of Bar. These fundamental advantages still exist today.
The refinery and smelter operated satisfactorily at or above design capacity until 1991. Production was then severely curtailed during the war in the former Yugoslavia in 1992-94. The imposition of sanctions made it impossible to obtain essential imported raw materials and equipment. The alumna refinery ceased production altogether in 1993 and 1994; smelter production was maintained at a low level through the use of stocks of alumna and anode scrap.
Today the Primary aluminium production plant operates at full capacity and the Alumna refinery at 210 000 t/y.
A range of semi-fabricating operations has been built up, originally to supply the Yugoslav market. These include a cold rolling mill, a foil mill and foil conversion facilities, an extrusion press, a forging shop, a cable plant and a plant that manufactures bicycle wheel rims. Sales of semi-fabricated products also fell sharply during the war in the former Yugoslavia, and have not yet recovered to their previous level.
| Potential for Recovery and Development |
kap has the potential to be converted into a competitive integrated producer of primary aluminium, given an investment which is far lower than would be required to construct a new plant of a similar size. The enterprise has the following fundamental advantages:
· A local supply of good quality bauxite
· Local power supply, based largely on hydro-electric stations, and currently sold on an LME-related tariff
· An alumna refinery which has been maintained in reasonable operating condition
· Access to a deep-water port at Bar
· A smelter, which incorporates Pechiney technology that is capable of being up-graded to meet modern standards in respect of metal quality, environmental practice and productivity.
· An experienced workforce which is capable of improving the current standards of operation, given suitable management and training.
· Location in the Eastern Mediterranean, with easy access to South European and Middle Eastern markets for aluminium and semi-fabricated products. |
The total cost of a modernization program for the Primary could be of the order of $50-60m, or below $1000 per ton of aluminium capacity. This compares with approximately $5,000 per ton of metal capacity for the construction of a greenfield smelter alone, and a further $800-1,000 per ton of alumna capacity for a greenfield alumna refinery.
The cost for downstream modernization is estimated to be about $15m.
| The Montenegrin Government is fully committed to privatisation |
The Government of the Republic of Montenegro is very conscious of the necessity to turn the Company around as quickly as possible, and has concluded that privatisation is the only possible route to ensure a profitable future for the Company. The Montenegrin Government therefore launched the process for the selection of an adviser at the end of 1997, which led to the selection through an open and transparent tender procedure of a consortium led by Credit Commercial de France, and comprising Resource Strategies (a sister company of the English company, CRU International Ltd), Price Waterhouse, Skadden Arps Slate Meagher & Flom, a US law firm, and Mediaconsult, a Montenegrin law firm. The selection process was supervised by the British Know-How Fund, and an advisory contract was signed by the Agency of Montenegro for Restructuring and Foreign Investment by the end of February 1998.
The Government has facilitated the work of the advisers, who presented a privatisation strategy report in June 1998. The privatisation strategy has been discussed by all interested Montenegrin parties (the Agency for Restructuring and Foreign Investment, the State shareholders, the Montenegrin lending banks, the State owned suppliers of power, bauxite and fuel, and the Ministry of Finance), and was validated by the Privatisation Commission in July 1998.
| The Government Intends to Privatise the Primary Aluminium Facilities and the Semi fabricating Facilities separately |
The Government has also considered whether kap should be privatised as a whole or whether the downstream operations should be separated from the primary aluminium assets (principally the alumina refinery and aluminium smelter). The Government is willing to sell the Company as a whole, but believes that the privatisation of the primary aluminium assets and of the downstream assets would be best carried out as separate transactions.
The Government of the Republic of Montenegro is looking for an investor willing to commit itself for the long term to the modernization and profitable operation of the aluminium assets of Montenegro. Therefore, the Government will favour a long-term solution including firm investment commitments over a period of five years.
| The Sales Record of kap, 1989-00 (tons) |
Prof. Dr Branislav Radonjic, Faculty of Metalurgy and Technology, University of Montenegro, Podgorica; Assistant General Manager (R+D and QA) of the Aluminium Combine; James Apostolina, International Advisor, Tel. ++381 81 644 202, ++381 81 644 204. |
