Bosnia's Aluminij output cut to trigger job losses

SARAJEVO, Dec 17 (Reuters) - Around 600 workers at Bosnian processing companies could lose their jobs because of aluminium smelter Aluminij Mostar's decision to cut output in 2009, officials warned on Wednesday.

Aluminij, Bosnia's sole aluminium smelter, said on Tuesday it planned to cut output by a quarter from Jan 1 because of the global economic crisis and high electricity prices.

This could severely affect small metal processors whose main supplier is Aluminij, and leave around 600 people jobless, Dario Tomic, the manager of electric cable producer TT Kabeli, said.

'We have started importing aluminium from Hungary at a much higher price as Aluminij could not secure the required supplies. The production costs have gone up so much that overall operation may be in question,' Tomic told Reuters.

Several aluminium processors that export around 70 percent of their goods said output fell by a third in October and they were considering job cuts.

'If the situation does not improve we will have to cancel some contracts, cut the workforce...we have already lost all profit in the past two months,' Predrag Covic, the manager of electric conductor and cable factory Kapis, said.

Economy professor Fikret Causevic said the aluminium processing sector would also be affected by the global financial crisis because of lower demand.

'The construction boom in the region will for sure stop next year, the auto industry is reducing demand for car parts, there will be less investment. The Bosnian metal sector is to experience a very tough year,' Causevic told Reuters.

Aluminij, Bosnia's largest exporter, recorded output of 121,750 tonnes of metal in 2007 and forecast output 140,000 tonnes in 2008 after it refurbished an anode plant in September.

The company, based in the southern town of Mostar, has long complained the Muslim-Croat federation government has forced it to buy expensive electricity from abroad instead of securing it regular power supplies at local prices, as it did for other large companies.

Aluminij's sell-off to Swiss-based commodities trader Glencore has been stalled for more than 18 months over a row on electricity prices and environmental issues.

(Reporting by Maja Zuvela; Editing by Sue Thomas) Keywords: BOSNIA ALUMINIUM/CUTS ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.