Page 12 - bne_December 2017_20171204

12 I Companies & Markets bne December 2017
Revived steel industry washes away Zenica’s blues
Ivana Jovanovic in Zenica
Anyone arriving in Zenica, central Bosnia & Herzegovina, prior to 2004 would have found the post-war town just as it was described in “Zenica blues”, a song by the famous ex-Yugoslavian band Zabranjeno pusenje (No smoking). Life in Zenica, the site of the broken country’s largest prison, was so grim the lyrics claimed “whoever survives 12 years in Zenica prison, is a real hajji”.
Most people arriving in Zenica today still sing a bit of Zenica blues, but the town is no longer grey even on a foggy early November evening. Today, Zenica defies stereotypes about post-war Bosnia, as it is a modern, growing town thanks to the rehabilitation of one of Southeast Europe’s largest steel mills.
The change started in 2004 when international steelmaker ArcelorMittal stepped in to reopen Zelezara Zenica, which had been heavily affected by the Bosnian war. After a 17-year halt in operations, steel production at the Zenica complex was restarted in 2008 – the result of four years of work by local engineers and ArcelorMittal experts from around the world.
The magnitude of the task was reflected in the name of the project to bring the steelworks back to life; it was dubbed ‘Phoenix’ after the great bird that rose from the ashes. Inte- grated production using iron ore from the nearby Prijedor mine began on schedule in July 2008, after an investment of over €90mn. ArcelorMittal’s total investments in Zenica so far are over €160mn.
Nine years later in November 2017, ArcelorMittal and Zenica jointly celebrated the 125th anniversary of steelmaking in the town, marking the occasion with an event on November 2.
In an exclusive interview with bne IntelliNews during the event, ArcelorMittal Zenica CEO Biju Nair stresses the contribution the revived plant has made to the local and national economy. “I can see with my own eyes how the town has grown together with the plant,” he says.
Recent figures show that over 2,200 people are directly employed at the steel mill and another 10,000 jobs in the
local supply chain depend on ArcelorMittal. Nair refers to research by the World Steel Organisation, which shows that for every job generated by a steel company 16 jobs are indirectly created. ArcelorMittal pays €30mn in gross salaries to its
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Zenica workers each year, of, which Nair calculates €15mn is spent on consumption in the local economy – “this money is going to the farmers markets, coffee shops, everywhere...”
ArcelorMittal has been among the top Bosnian exporters for years, topping the list in 2013, 2014 and 2015 before dropping to second place in 2016 due to worsening conditions on the
“I can see with my own eyes how the town has grown together with the plant”
global steel market. The company imports coal from Australia and the US, while it exports long steel products to all the ex- Yugoslavian countries as well as to Austria, Bulgaria, Hungary, Italy and Romania. According to Nair, the contribution of the company (in terms of exports minus imports) to the country’s GDP is over 2.5%.
Steely DNA
The story of steelmaking in Zenica is one of resilience, innovation, engineering skill, hard work and determination, Nair tells bne IntelliNews. “These things are in the DNA of the people,” he says, adding that this was a key factor in the decision to invest in Zenica.
There had to be some motivating factor to convince ArcelorMittal to invest in the face of claims by many experts that restarting the steel mill after so many years of inactivity would be impossible.
Talking to bne IntelliNews in a mixture of Bosnian and English, Nair underlines that what tipped the balance was that when the due diligence was carried out, it became clear that people wanted to see their plant operating and were ready to start working.
“Whether it’s in Eastern Europe or Russia or Kazakhstan or other regions, our company always looks for opportunities to invest where there is a history in steelmaking,” says
Nair. “History means that there are people who know how to make steel. What matters most in any industry is people and knowledge and skills. If you go into a greenfield project, the