'Promising' but not a golden goose: verdict on Trepça assets

Trepça can be profitable and will generate sustainable jobs, mainly for Kosovars. All people in Kosovo will benefit from it, DSRSG Andy Bearpark, head of UNMIK's EU pillar predicted last week.

It had a solid core of profitable assets, with sufficient profit potential to attract $200 million in private investment-the minimum needed to restart production, his officials believe. In addition, donors have been told that as much as $90 million should be spent on the environmental damage attributable to past Trepça operations.
 
But key issues have to be resolved before UNMIK can solicit the private participation. Paramount among them are who owns Trepça and how to settle Trepça's debts, some of which are internationally recognized and almost certainly enforceable.
 
Announcing the preliminary findings from a six-month financial, technical and environmental assessment of the Trepça mines, concentrators and metallurgical plants within Kosovo last Friday, Bearpark carefully distinguished the two areas of financial needs. The $200 million needed to refurbish the five out of Trepça's eight Kosovo mines considered the most viable would have to come from the private sector. "Donors do not support the private sector nor do they support public sector production enterprises. They will not come to supply the funding needed for restarting Trepça," Bearpark emphasized.
  
Trepça would therefore prosper to the extent the private sector believes Trepça's prospects represent a good return on their investment, taking political and other risks into account. In other words, "the private sector will only be interested if the returns are commensurate with the business risks", the DSRSG said.
  
On the other hand, Kosovo's donors had indicated, as recently as the previous week during their own meeting in Pristina, that they would be willing to help with the amounts needed for environmental clean-up and other obligations.
  
For now, UNMIK was still digesting the contents of the 13-volume report, which was prepared by the U.S.-French-Swedish mining consortium, ITT Kosovo Ltd. that, since last August, had also acted as Trepça Administrator.
 
Its conclusions appeared fully to support the Administration's policy of persuading donors to support asset preservation and safety interventions in the mines and surface facilities, UNMIK officials noted. They also underpinned UNMIK's intention to seek ways to resolve the debt/ownership questions as soon as possible.
   
For the present, no business decisions will be taken on the basis of the report, they insist. This is because the ore body data-particularly those indicating ore quality and size of reservcs-are incomplete and what they have has to be independently confirmed. Nevertheless, it is clear from the financial viability analysis, that, unless the assumptions concerning ore quality and reserves prove wildly wrong, running Trepça as a commercial business will not provide as many jobs than in the past. This could be as few as 1,400 if only the five named mines (at Belo Brdo and Crnac in the north, Stari Trg near Mitrovica, and Ajivalia and Novo Brdo in the South) and their associated concentrators restart. Restarting the lead and zinc metallurgical plants at Zvecan and Mitrovica as well might raise the payroll to 2,700, ITT calculates.
   
The best chances for Trepça employment lie in maximum integration. The metallurgical plants, on which 1,300 jobs could depend, would have to be integrated with the mines and concentrators in order to survive economically, the ITT figures indicate. Their prospects will improve further if the parts of Trepça in neighbouring Serbia and Montenegro resume shipping concentrate to the Kosovo smelters.

Action plan

With all the basic financial, technical and environmental information now in hand, UNMIK is working to a six-point action plan:

- Prepare Trepça for handover to a private entity
- Preserve existing assets
- Address debt and ownership issues
- Clean-up environmental damage
- Establish a legal framework for commercial mining
- Train and retrain the Trepça workforce.
   
This was the second phase of a three-phase strategy that began with gaining full understanding of the very complex situation. Phase II, which is to develop conditions for return to operation, began this week with the installation of a new interim management team recruited by UNMIK.

The team would be responsible for continued asset preservation, environmental remediation and further development of business and financial plans for opening individual facilities as soon as possible.
   
Rapid resolution of the ownership problems was essential to the success of future private sector operations, Bearpark noted. The financial debts were not only the highly visible, international ones. They included also the less visible but equally substantial social debts-to workers laid off during the last decade, to communities damaged by irresponsible management of the complex, to the elderly dependent on pensions or whose health was damaged by years of pollution.
 
Gaining full access to the mines was vital for producing complete and fully documented ore body assessments. A new commercial mining law was also essential for investors so that whoever operated Trepça could be assured "sufficient quiet enjoyment of the facility" to ensure return on investment. Mining laws would also govern exploration and exploitation of Kosovo's mineral resources.
  
Finally, working together, which meant cooperation among all the Trepça stakeholders, and accepting realities, were also important preconditions for restarting Trepça. A broad variety of actors had an interest, and none of them would be able to reach their objectives without taking the intentions of others into account. All actors should be aware of this, if progress is to be made, Bearpark warned.

Kosovo general election preparations begin in earnest

General elections preparations are now underway. SRSG Hans Haekkerup has asked the Permanent Council of the OSCE for support in planning and organization "so that we can have elections hopefully this year". He is adamant, however, in insisting that such elections can only take place once the legal framework has been agreed upon.
   
In order to set the legal framework, a working group of 15 members with an equal number of appointed Kosovo members and internationals and an international chairman, Johan van Lamoen, will begin an intense series of meetings on Tuesday, March 6. The Kosovo membership will include representatives of the major Kosovo Albanian parties: Fatmir Sejdiu (LDK); Arsim Bajrami (PDK); Muhamet Kelmendi (AAK); Kosovo Serb Djordje Aleksic and a representative of the other minorities, Bosniak Abedin Ferevic, plus a representative of civil society Blerim Reka and independent Blerim Shala. Those parties and communities not represented on the working group will be consulted as well. The seven international members will be representatives of the Pillars and experts who participated in the Rambouillet talks. In addition to the legal consultations at the working group level, the SRSG will conduct political consultations with both the IAC and KTC.
   
"The drafting of the regulation, that is the legal framework, will be done in the working group. But of course the input of others has to be part of the process," Mr. Haekkerup said. The election date will largely depend on the speed at which the group works, he said. "If they make progress quickly, we'll also have elections quickly. There is a risk they will not reach any agreement. I have the ultimate power to make the decision, but I would certainly like to see them do the bulk of the work and leave as little as possible to me in the end." The aim of the consultations is to produce a legal framework that will define the structures, competencies and powers of an Assembly and Executive body. A key part of this process will be defining the areas of responsibility that can be transferred to self-government immediately after Kosovo-wide elections are held. Other areas to be transferred later, and those areas that will remain the reserved powers of the SRSG will also be clarified. The SRSG has stressed that the legal framework will not be a "constitution", as the legal framework will not be the final political settlement.
   
In Brussels, the EU General Affairs Council welcomed the SRSG's proposal to develop a legal framework for provisional institutions for self-government, "including adequate safeguards for minority rights". The Council expects all ethic groups in Kosovo to participate constructively in this process. In this context, the Council underlined the need to develop the electoral system further, including an updated and integrated civil and voter registry, including refugees and IDPs, to ensure that the elections truly represent the will of the population of Kosovo."
   
The Council stressed the importance that all communities participate in the elections and it "encouraged the authorities in Belgrade to support the election process and exert a positive influence on Kosovo Serb participation in the electoral process".

Briefs . . . .

The Co-Heads of the Department of Health and Social Welfare -Hannu Vuori and Pleurat Sejdiu-have delivered a comprehensive report on the state of Kosovo's health care system to both the Interim Administrative Council and the Kosovo Transitional Council. The Department's 35 staff (including four internationals and 31 Kosovars) oversees five regional hospitals and many health houses, with a budget of DM 104 million. Of this, DM 92 million derives from the Kosovo Consolidated Budget and DM 12 million from user fees. The state of Kosovo's health remains the poorest in Europe, after Albania. The heath care system which the Department inherited is physically run-down and structurally top-heavy, with little attention to preventative medicine. The Department is working to create an equitable, non-discriminatory, effective, high-quality, accessible and sustainable health care system. It has been rehabilitating the infrastructure, with specialists now allocated throughout Kosovo. Advanced training has been arranged elsewhere in Europe.

The Department of Transport and Infrastructure has received a donation of 10 inter-urban and urban buses from the City of Barcelona. The buses will help to build up Kosovo's fleet of buses which was severely depleted during the 1999 conflict. Five of the buses are destined for the city of Istog/Istok, in the Pejë/Pec region, and five for various other municipalities. Public bus transport is by far the most widely used means of transportation in the province where up to two thirds of Kosovars depend on bus service.

UNMIK is in the process of issuing legislative proposals in order to overcome the lack of a relevant or applicable labour law in Kosovo. It will soon issue a Regulation on the Fundamental Principles and Rights at Work to deal with the urgent need to establish general rules for the Kosovo labour market. The new Regulation is being promulgated in an effort to update the pre-1989 labour law and bring it in conformity with an emerging market economy. Its purpose is to encourage much-needed foreign investment in Kosovo by providing greater clarity to the current situation. At the same time, it seeks to protect the rights of employees and ensure that employers and businesses fulfill their legal obligations.

A workshop that aimed to inform NGOs on the work of the Ombudsperson's Institution has been held in Pristina. Organized by the OSCE and the Ombudsperson's Institution, the seminar sought to give practical advice in judging how and when a case can be referred to the Ombudsperson's Institution. The Institution plays a special role in investigating and mediating complaints from individuals, groups and organizations about human rights violations and possible abuse of power by the authorities. Representatives of 12 NGOs were presented with cases that could be applied to real life situations in Kosovo. The participants then examined these cases for possible remedies that could be taken and whether clients could be referred to the Ombudsperson's Institution. In March, similar seminars will be held in Kosovo's other regions.

The Department of Post and Telecommunications plans to expand Kosovo's mobile phone network by 400,000 new subscribers by the end of 2001. Since the demand for mobile phones remains high and the fixed lines are still chaotic, the expansion of the mobile network may prove to be a viable alternative for users.