Thursday, June 23, 2005

Kosovars Spy Salvation in Mineral Wealth

http://www.iwpr.net/index.pl?archive/bcr3/bcr3_200505_557_2_eng.txt



Experts. reports speak of vast, untapped resources, but questions over
their exploitation remain.

By Arbana Xharra in Pristina (BCR No 557, 25-May-05)

The sale in Kosovo of one of its biggest mineral mines has raised hopes
of
the more effective exploitation of what experts say is a great
potential
source of wealth.

The Ferronickel mines and plant in Drenas/Glogovac, 30 kilometres west
of
Pristina, went under the hammer last week.

The sale was organised by the much-criticised Kosovo Trust Agency, KTA,
which the UN has charged with selling off Kosovo's socially-owned
firms.

That this region is mineral rich is beyond doubt. A recent joint survey
by
Kosovo's Directorate for Mines and Minerals and the World Bank put a
13.5
billion euro price tag on its resources of raw materials.

The survey warned that the mines needed huge investment, to the tune of
about 1.8 billion euro, which might generate 35,000 new jobs.

Rainer Hengstmann, director of the Independent Commission for Mines and
Minerals, ICCM, is especially interested in Kosovo' reserves of
lignite,
used primarily for generating electricity and heating.

"Kosovo's lignite wealth is strategically important, as it is one of
the
biggest reserves of high quality lignite in Europe," he said.

Agron Dida, deputy minister for Energy and Mines, said, "In 2004,
Kosovo
power plants used only around 5.7 million tonnes of lignite - and there
are
an estimated ten billion tonnes [underground]," he said. "We should be
well
set for the next few centuries."

Although Kosovo is apparently well endowed with valuable raw materials,
there is little to show for it. The territory suffers from routine
electricity shortages, for example, and Agim Shahini, president of the
Kosovar Business Alliance, says the power cuts put off many foreign
investors, "The unstable electricity supply is the main disincentive to
investors because factories cannot work on generators."

Even the factories that should be processing Kosovo's underground
minerals
lie unused and empty.

Ferronickel is one of them. Murat Mehaj, a geodesy expert who has
worked
there since 1984, says at the peak of operations in 1989 the company
employed around 2,000 workers, producing 7,800 metric tonnes of nickel
per
year.

Matters had deteriorated by 1991, when production slumped to only 300
tonnes per year. As Slobodan Milosevic tightened his grip on Kosovo,
the
plant crumbled, laying off 1,800 workers.

The infrastructure suffered in 1999, when Serb police were stationed in
the
buildings, which were hit by NATO bombs.

A sign of growing international interest in Kosovo's raw materials was
the
World Bank's decision on April 21 to give 2.5 million US dollars
towards
revitalising Kosovo's energy and mining sector.

At a press conference on March 17 in Pristina, Hengstman said two of
the
world's largest mining exploration and extraction companies were racing
to
exploit these underground riches, though he did not reveal their names.

But the question of Kosovo's final status continues to block the
exploitation of its natural resources. In the current legal vacuum,
Serb
officials say Belgrade has a right to veto any proposed deals.

Ivan Ahel, a Serb expert on Kosovo ores and technical director of
Belgrade's Zirovski Vrh uranium mine, said, "Under UN resolution 1244,
Kosovo is a part of Serbia and until that status changes, Serbia has a
right to be involved.

"As for who should manage that wealth, that requires a political
solution
between the Serbian and Kosovo governments."

Ahel downplayed reports of the wealth lying underneath Kosovo's
surface,
saying the quantities were large but the quality low.

"We have to make it clear to some Serb and Kosovo politicians that the
commercial interest is not as high as it might appear," he concluded.

Hengstman disputes Serbia's claim on Kosovo's natural resources. "The
natural wealth of Kosovo belongs to the people of Kosovo," he said,
cautioning that he could not deal with such complaints. "That's for the
politicians to deal with."

While Kosovo's status question is unresolved, Haki Shatri, Kosovo's
finance
minister, says grants like the recent award from the World Bank will
remain
important.

"Kosovo needs such donations because our unresolved status means we
cannot
get loans from international monetary institutions," he said

Not all local Albanians share in the talk of a rosy future for Kosovo
built
on valuable raw materials. Some point out that a great deal of money
has
been invested already in mining projects - without obvious results.

Around one billion euro has so far flowed from the World Bank and
European
Agency for Reconstruction, EAR, into Kosovo's mining and power
projects.
Yet the protectorate cannot even secure a decent power supply to homes
and
factories.

"It is amazing to hear that there is this great wealth of minerals
underground that could help improve our electricity supply," one local
businessman told IWPR. "I have had to invest thousands of euro to buy
powerful generators."

Arbana Xharra is an economics reporter on Koha Ditore.

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