China’s Zijin Mining to officially take over RTB Bor tomorrow – Nobody held responsible for excessive spending

Zijin has been selected as a strategic partner for the Mining and Smelting Basin Bor (RTB Bor), acqiuring a 63 percent stake in the company, while undertaking to implement the business plan worth $1.26 billion, carry out investments worth $350 million and $200 million debt settlement, as well as to keep all 5,000 existing workers.

The deal is part of the government’s plan to sell-off indebted state-run companies to help spur growth and relieve pressure on the budget, as recommended by the International Monetary Fund.

RTB Bor will be the second Serbian company to be run by a Chinese business. In 2016, China’s Hesteel bought Serbia’s steel plant in the town of Smederevo.

RTB Bor’s copper exports in the first half of 2018 rose 23 percent to 15,000 tonnes, company data showed. Export revenue between January and June stood at $107.1 million and it sold copper worth an additional $30.9 million domestically.

RTB Bor accounts for 0.8 percent of Serbia’s GDP, but the government hopes its share will increase after the Chinese investment.

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Two other companies competed for a stake in RTB Bor – Russia’s U Gold and Canada’s Diamond Field, with the second company eliminated from the process due to submitting incomplete bidding documentation.

Settling old debts of RTB Bor

Back in August of 2017, a Geneva court has ruled that Serbia had to pay $40 million to the Greek company, Mytilineos in compensation relating (RTB Bor). The tribunal ruled that Serbia indirectly expropriated Mytilineos’s investment without compensation and frustrated its legitimate and reasonable expectations as an investor to be afforded fair and equitable treatment by the Serbian state, it said.

In February this year, Serbian government and the Greek company signed an agreement stipulating the settlement of $40 million in line with the court’s ruling.

Nobody held responsible for excessive spending

Despite the relevant regulation stating that public and state companies should be run by professional management selected at a tender, the former General Manager of RTB Bor, Blagoje Spaskovski has been holding this position for years, and will remain in it for the next three years, according to the relevant contract.

The Serbian government appointed Spasovski general manager at the end of October 2008, at the suggestion of the then Minister of Economy and URS leader, Mladjan Dinkic.

It was also precisely then that the new investment cycle started in Bor. In 2013, Insajder reported that the new investment cycle in Bor soon escalated into uncontrolled spending of resources.

Despite the many evidence of misuse of funds to date, no-one has been held responsible for it.

The building of the smelting facility in RTB Bor is the best example of overspending since it was built thanks to the loans guaranteed by the state.

As Insajder reported, the costs of construction of the new smelting facility increased three times over the years – from 100 million to almost 300 million euro. The Canadian company Lavalin was commissioned to build the smelting facility as a result of direct negotiations without submitting a bid.

At the beginning of the year, the media reported that, at the orders of the Prosecution Office for Organized Crime, the police began investigating the construction of the smelting facility which is one of the biggest investments that RTB Bor has made in the last few decades.

The investment was launched when Mladjan Dinkic was the Economy Minister, and it was approved by his ministry. Dinkic was interviewed in January by a police officer with the smelting facility being one of the topics. To date, the Prosecution Office for Organized Crime has not launched an official investigation into this case, and whenever journalists inquired about the developments in the case, they got the same answer from the Prosecution Office – “the case is in the pre-trial process”.

In 2013, Insajder published a series of articles about misappropriation of funds in RTB Bor called “The Debt Mine” (“Rudnik Dugova”, in Serbian).

(Insajder, 17.12.2018)



This post is also available in: Italiano

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