Podgorica Aluminium Plant

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Kombinat Aluminijuma Podgorica

Type	Private
Industry	Metallurgy
Founded	1969
Headquarters	Podgorica, Montenegro
Key people	Viacheslav Krylov (CEO)
Products	Aluminium Aluminium alloys Alumina
Employees	2746
Website	http://www.kap.me

Podgorica Aluminium Plant (Montenegrin: Kombinat Aluminijuma Podgorica - KAP) (MNSE: KAPG) is an aluminium processing plant, located on the southern outskirts of Podgorica, Montenegro.

Overview

Construction of an aluminium smelter in Montenegro was first proposed in the 1960s, when significant quantities of high quality bauxite 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.

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 plain. 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.

Financial crisis impact

As of 2008^[update], the KAP has struggled to survive the impact of ongoing economic crisis. 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.

External links

• (Montenegrin) (English) Official Website
• (Montenegrin) (English) Listing on the Montenegro Stock Exchange