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November 17, 2017 www.intellinews.com I Page 3
people how to make steel and how to understand the technology. Zenica already had this.”
ArcelorMittal is the world's leading steel and mining company, with a presence in 60 countries and an industrial footprint in 19 countries.
These include countries like Mexico, Kazakhstan and Ukraine, all of which have a tradition of steelmaking.
ArcelorMittal’s website stresses Zenica’s history in the industry; people have been producing steel for a millennium thanks to the area’s natural resources, large coal deposits, and the commu- nication lines along the Bosna river valley. The steelworks itself dates back to when a group of Austrian industrialists set up Iron and Steel Works Zenica in 1892 — part of the first major wave of industrialisation in Europe, that extended as far as Bosnia.
When discussing the decision to invest in Bos- nia, Nair also talks of the sympathy felt by peo- ple around the world towards Bosnia because of what the country endured during the wars of the 1990s. “I was not here in 2004, but definitely I can feel that some emotions must have also played cards. When you make an investment in a country like Bosnia which needs investment and growth, in one way you are supporting that country and in another way you want to benefit from the coun- try’s need for investment which means you will have the support of the government and the peo- ple,” he says.
“So, I would say: knowledge and skills of the people and opportunity,” Nair sums up the decision to invest.
Market challenges and advantages
In addition, despite the severing of many sup-
ply chains after war broke out in ex-Yugoslavia and the country fractured, markets for Zenica’s products remained and its products have a strong reputation. ArcelorMittal Zenica (Zelezara Zenica before the takeover) has for years been the key supplier of long steel products to ex-Yugoslavia.
Almost all these countries can be reached by truck, and the company can thus deliver to the door for its customers.
“So, you had a market and customers believing
in the products of Zenica. Today, with ArcelorMit- tal, we have great value from that. You can read between the lines when I say that we always try to connect between the traditions and new knowl- edge. That’s how we came here,” Nair adds.
Not that is has all been easy. Nair sees political instability as the main challenge for developing business and investment in infrastructure in Bos- nia and the wider region.
In addition, concerns have been raised by journal- ists and environmental groups about air pollution in Zenica. Nair says the company is now address- ing environmental issues. “We have invested in an old factory and it brings environmental challeng- es. We have made investments of nearly €50mn in this segment so far but we have to do more, and the next two or three years are very critical to us to complete our obligations related to the environ- ment,” he tells bne IntelliNews.
ArcelorMittal is also struggling to boost its stake in the nearby Prijedor mine, which has been the main supplier to the steel mill in Zenica for dec- ades. Alongside the acquisition of Zenica in 2004, ArcelorMittal bought 51% of the company then named Iron ore mines Ljubija. This company today operates under the name ArcelorMittal Prijedor, and exports iron to other ArcelorMittal companies.
The international steelmaker now wants to in- crease its stake in the Prijedor mine, where the remaining 49% is owned by the government of Re- publika Srpska, even though Zenica is located in the Bosnian Federation, the country’s larger en- tity. Taking greater control of the company would ensure a source of iron ore for Zenica’s unit.
However, the Republika Srpska government’s at- tempt to sell over 60% of its 49% stake in Prijedor this spring failed due insufficient political consent and has now been put on hold. It’s not clear what