Not a single dollar out of a total of USD 1.46 billion, which is how much the Chinese offer for Mining and Smelting Basin Bor (RTB) is worth, will go to the Serbian budget – it was unofficially confirmed to the Politika daily in the Government of the Republic of Serbia.
Zijin Mining Group will invest USD 1.26 billion in the company in which this group will be the majority shareholder, with a share of 63%.
The remaining USD 200 million will be used to pay the company’s old liabilities, based on the Prepared Restructuring Plan (UPPR) that is agreed between RTB and banks.
Indirectly, the state can obtain money from this transaction only on the basis of payment of debts to state creditors.
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If, in choosing a strategic partner, the state opts for the recapitalization model, that means that money is not going to the state budget – explains Dragan Djuričin, a professor at the Faculty of Economics.
“In this case, the money is pumped into the company to improve its performance. This, however, does not mean that the state will not have indirect benefits from it. In the case of RTB Bor, the indirect benefits are important since they relate primarily to revenues from taxes on wages, VAT, but also to the payment profit tax. If there is a possible plan to create new jobs than that is also an indirect benefit for the state. In the case of RTB Bor, things had to be done this way, because the state kept pumping money from the budget into the company, and this will now stop”, Djuričin adds.
“Also, the Serbian government was under constant pressure from the International Monetary Fund and the World Bank to solve this problem because RTB represented a burden on the state budget. For years, this company has been subsidized and the recapitalization is a step towards restructuring the company”, says Djuričin.
The Serbian government has unofficially said that the state would not be a guarantor for loans that Zijin Mining Group might take to implement its business plan.
Unofficial sources say that that Zijin’s business plan for RTB Bor has three segments: mining and smeltery, the sulfuric acid factory, and ecology and environmental protection.
The entire business plan is confidential, but the Minister of Mining and Energy, Aleksandar Antić has already revealed some details. As stated, USD 320 million will be invested in the Cerovo Mine, and USD 136 million in environmental protection. Zijin also planns to invest in the Smeltery (not stated how much), in order to increase the production capacities up to 150,000 tonsne. The current maximum production capacity is 80,000 tons, and the Smeltery produces half its capacity.
The negotiations between the minority and the majority partner will begin in a few days, when a team of Zijin Majning managers comes to Belgrade. It is expected that the contract will be signed by the end of this month, and that the Chinese will take over the operational management of the company from next year. In order for Zijin to be registared as the majority owner of RTB by the end of the year, the company has to pay at least USD 100 million of the required recapitalization. Minister Aleksandar Antić has already stated that he has the indication the Chinese company would pay about USD 300 million.
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