UNMIK/FR/021/01
FEATURE RELEASE - 15
March 2001
Industry
Trepca: The
Potential for Peace, and Prosperity
By Bernard Salome
and Dana P. Eyre*
Recent international headlines made bad reading for Kosovo: "Clashes Renew Fears for Balkans", "Crisis Talks on Kosovo Tension", "Battles Revive Fear of Civil War", "Fresh bloodshed in Balkans as West Seeks Strategy" and "The Danger in Kosovo" were typical.
Europeans and North Americans read them and wondered - can we truly help build peace in Kosovo? Is it worth the investment or are we squandering time and money? Will the region ever be able to join the Europe of today, or is it stuck in the mud of history, always looking to remember events in the past and never looking to build the future?
The leaders of those countries do listen to their citizens, and are forced to defend their policies, including their help for Kosovo, to them. So far, they have been able to maintain the support of their people and are renewing their commitments. But they also depend on the people of Kosovo to demonstrate their own commitment, their own willingness, to look forward to the future, and to work together to build it. Trepça is a clear opportunity to do that.
Trepça is a one-time chance to demonstrate Kosovo's willingness to become a partner in building a peaceful and prosperous south-eastern Europe. If the people of Kosovo can work with UNMIK, with donor nations, regional partners and private investors to revitalize Trepca, they can show the world their ability to deal with the equally complex and difficult problems of peace, and their willingness to make pragmatic compromises to build a better future.
The tasks ahead
What must UNMIK, the people of Kosovo, and their leaders, do to help
rebuild Trepca?
First, we all have to understand the scope and
difficulties. evitalizing Trepca is a problem of enormous size and
complexity and there are no simple solutions. Trepça is:
· A
environmental problem. Mines naturally leak acid that contaminates water
supplies. Man-made lead dust poisons people. Hazardous chemicals
improperly stored threaten surrounding communities.
· A labour and
employment problem. Workers have not been trained in years. No
investments have been made in training the workforce of the future.
Health and safety requirements long common must be implemented in Trepca
facilities before restarting.
· A technical problem. Trepça's
machinery is years old and out of date. Some parts of ore processing
facilities date from the original British investments of the 1930s.
None of the machinery is able to compete, as it is, with the modern
high-technology mines of today. Exploration records are also out of
date: we simply do not know enough about how much ore is in the
ground.
· A legal problem. There is wide disagreement over
what facilities are parts of Trepca and what facilities are
independent. There is disagreement over who owns Trepca. There
are arguments over debts from contracts dating back into the
1980s.
· An economic
problem. The facilities will not work without private investment,
which in turn will be difficult to attract without substantial improvement
in all other issues. Investors are not interested in risking their
money without the ability to make a profit, and they do not want to pay
for the mistakes of previous administrations.
Because of the complexity and scope of these problems, UNMIK engaged a large number of international experts to help it understand the problem. Working closely with local experts, the International Technical Team (ITT) Kosovo Consortium produced a highly complex and detailed report on the status of Kosovo. Over 4,000 pages in length, UNMIK still needs time to read and understand it. In the meantime, a comprehensive summary for wide public distribution is being prepared and technical portions of the report itself will be made available to appropriate local experts for further review and comment.
From our initial review of the report, three key conclusions stand
out.
First, Trepca has the potential to make profits, and
because of that to produce jobs that will last, with good wages.
Secondly, in order to make a profit, and produce jobs, and pay taxes,
Trepca must be invested in. Our current estimates are that it will
require $200 million dollars in investment in order to bring the most
potentially profitable core facilities (mines, concentrators, lead
smelter) up to competitive European standards, and more investment for
other associated facilities. This investment must be private
investment, not donor support. Trepca will prosper only to the
extent that the private investment sector believes that Trepca has the
potential for a good return on their investment.
Thirdly,
Trepca's problems do have to be solved: they cannot be wished away, nor
can we deny their complexity. Investors will not invest, and jobs
will not be created, if Trepca is burdened with the problems of the past.
Environmental problems must be addressed; a new, trained, work force must
be developed, managers and engineers must be educated, industrial assets
preserved and mines made accessible so that critical geological
investigations can be completed, ownership and debt issues resolved, and
commercial and mining law developed. .
Requests to donors
UNMIK, donors, investors, and most importantly,
the people of Kosovo, all have their part to play in solving these
problems how will we overcome them? By working
together.
UNMIK's commitment
is to facilitate transition to commercial operation by overcoming
handicaps unique to Trepca's past. Trepca's past
mis-management and history of exploitation by the Milosevic regime
produced an environmental disaster, mines and production facilities are
without the records and the geological exploration necessary to completely
and thoroughly assess the current status of
ore resources. The work force split by ethnic tension and lacks modern skills.
Its management that is technically and commercially out of date.
UNMIK will work to secure donor funding to overcome these difficulties. Current plans are to seek funding for three specific activities to facilitate the transition to successful commercial operation.
First, it will seek support for accessibility and safety preparations necessary for ensuring access to the mines. Because of the mismanagement of the past decade, mining and processing records were not properly maintained anywhere in the Trepca complex. And in at least one case (the Stari Trg mine) there is clear evidence of orders to destroy such records in case of war. It has made efforts to produce complete and fully documented ore body assessments impossible so far. Collapse of the mine maintenance infrastructure in the mines at Ajvalija and Stari Trg mines, resulting in flooding and inadequate air supplies for examination of these mines, compounded the difficulty.
Thus, ensuring access to all the mines in the coming months is vital, both for the transition to commercial operation and as a demonstration of commitment to the workers and people of the region. Flooded mines must be pumped out, ventilation equipment must be repaired, maintenance systems must be restored for hoists and access equipment, and some portions of collapsed supports must be repaired.
Secondly, UNMIK will try to mobilize international community support for a programme of community transition, management and worker retraining, and retrenchment. Its aim is to ensure the availability of the trained workers and managers necessary to a successful operation. It will also aid the transition to other employment of those no longer necessary in the new, modernized operations of the facilities. It will therefore train workers returning to Trepça and provide retrenchment programs for those not returning to work there. There will also be broader community adjustment support to replace the social underpinning provided by Trepça to local communities in the past.
Perhaps the most critical, and unique, aspect of this organizational restructuring effort will be that devoted to management training and education. Its aim is to ensure that opportunities in Trepca management are seen as a promising future by Kosovo's best and brightest young people. The programme, if funded, would include European language training, modern leadership and management skills, business finance and organization, manufacturing management and quality control, and an international mining industry orientation. Its graduates would provide Trepca with the fresh management talent it will need in its difficult transition period.
Thirdly, UNMIK will seek support for the environmental remediation
activities that must be undertaken to ensure Trepca's mismanagement of the
past does not endanger public health in the future. The scale of
that damage is such that burdening future operations with clean-up costs,
even before start-up, would be financially unfeasible for a commercial
operation.
The environmental remediation programme will have
two components: cleaning up Trepca facilities "within the fence"
surrounding its facilities; and remediation of damage to communities and
areas surrounding the industrial facilities, "outside the fence". This
effort is the preliminary planning stage, and support is required for
further assessment and planning, and for undertaking immediate remediation
measures.
The people's role
The final factor critical to the success of
UNMIK's efforts, and ultimately the most important factor, is the support
and hard work of the people of Kosovo.
In order to gain the donor support, and mobilize the critical private investment required, UNMIK needs strong local partners. There must therefore be a serious dialogue about Trepca. Unions must talk with members, managers with workers, politicians with the local communities, and all must talk with UNMIK. We hope you will offer concrete suggestions that take the realities of Trepca into account, and that make our joint efforts stronger.
The fundamental realities are clear: Trepca must become a profit-driven corporation governed in accordance with internationally accepted standards. Its future must be driven by economic considerations not political concerns. All profitable corporations work across local, regional, and national boundaries following the same rules. They pursue profits, not political agendas. As a result, they are able to pay good salaries, and generate good, sustainable jobs. They pay taxes, they contribute to their communities. Their accounting is in accordance with international standards. Their hiring is based on qualifications and ability, not on personal ties or political favours. They obey international business law. They invested in the future: money made today is used to ensure profit and jobs tomorrow.
Unless Trepça follows these same rules, neither will investment come,
nor will the enterprise succeed.
Finally, it should be recalled that
UNMIK alone cannot resolve the problems of Trepan. Nor can it develop
Trepça's potential as a source of peace and prosperity. For this it needs
the active, resolute support of the people of Kosovo. If the peoples
of Kosovo creatively help UNMIK in its efforts, it will help UNMIK
demonstrate to the world the abilities of the people of Kosovo to lead
themselves and build peace and prosperity.
Thus, we can make Trepca a functioning part of the economy of Europe and the world, or we can let mines flood and equipment rust while we are distracted by other disputes. The choice is ours, and we must make it now.
*Bernard Salome holds a Ph.D. in development economics from the
University of Paris Sorbonne.
He has worked in Kosovo for over 18 months and
completed service as Head of the Economic Policy Office, O/SRSG,
UNMIK.
Upon completion of his
secondment to UNMIK he will return to the World Bank in
Washington D.C.
* Dana P. Eyre is sociologist with a Ph.D. from Stanford
University. He currently serves as an Economic Affairs Officer in
the Department of Trade and
Industry.
He served in Bosnia in
1997-1998 and has been in UNMIK since November 2000.
Contact: P.
Ellwood
(038) 504 604 Ext. 5471
E-mail:ellwood@un.org
Photo Credit: Boliden Co