September 2, 2011 / 2:04 PM / in 7 years

UPDATE 1-Bosnian smelterer Aluminij Mostar back in profit

(Adds quotes, further details)

* Aluminij Mostar back to profit in the first half of 2011

* General Manager expects 2011 to end with profit

* Company to slash workforce by around 10 percent

* Aluminij to fix the price in advance in future deals

By Daria Sito-Sucic

SARAJEVO, Sept 2 (Reuters) - Aluminij Mostar, Bosnia’s sole aluminium smelterer, returned to profit in the first half of 2011 after posting a loss of nearly 13.4 million Bosnian marka ($9.7 million) in 2010, General Manager Ivo Bradvica said on Friday.

Bradvica said on the company’s website that he expected Aluminij to also end the year with a profit and that he has secured the support of shareholders to slash a 900-strong workforce by around 10 percent.

“It’s not a minor achievement to take over a company that ended 2010 with a nearly 13.4 million marka loss and turn it into a profit that is significantly above zero,” said Bradvica, who became the company’s general manager in December.

However, the company declined to disclose actual figures.

Bradvica said he expected the company’s operation to improve in the fourth quarter because he hoped that lower aluminium prices in the world market would rise again at the end of September.

He also said that around 10 percent of jobs would be cut as a means to increasing productivity and this would be achieved throught the early retirement of some workers.

FUTURE PRICING

Bradvica also said that a rise in production costs had caused Aluminij to change the way it will do business in future so that it can better cope with higher input prices.

“We shall no longer tie the price (of aluminium) to the London Metals Exchange (LME) but will fix the price in advance,” Bradvica said.

“We shall announce the change in our business operation to our partners in a timely manner, set the price at which we shall not be at loss and increase it by a percentage enabling our positive operation,” he said.

Bradvica said that Aluminij was also considering the construction of a gas-fired power plant with an annual capacity of 425 megawatts to meet the company’s own needs and as much as 200 MW for sale.

There is also an option of constructing a solar power plant and talks on such a technology are underway with Italian partners, Bradvica said, but declined to name them.

Bradvica had earlier told Reuters that he expected Aluminij to produce a record 128,500 tonnes of primary aluminium this year, after the company returned to full capacity in late 2010. In 2009 it was forced to cut output by a quarter after the global economic crisis slashed demand for the metal. ($1=1.372 Bosnian marka) (Editing by Greg Mahlich)

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