Related News

The EBRD is helping Serbia and Montenegro’s Sevojno Copper Mill complete the overhaul it began after privatisation in 2004. A €
16mn loan to East Point Holdings (EPH), a Cyprus commodities-trading company which owns 35% of the 1950s-built mill, will allow Sevojno to increase production capacity and operational efficiency through the purchase and upgrade of equipment.


At its peak in the 1980s, Sevojno turned out 65,000 tonnes a year of semi-finished copper and brass-based products. But business was crippled during the conflicts of the 1990s, and production dropped by more than 90%.



Restructuring since privatisation has brought production back to 32,000 tonnes a year. Production costs per tonne have been trimmed and are expected to fall further by 2007. Once EPH’s investment programme is complete, Sevojno’s capacity should rise to 45,000-50,000 tonnes a year. The company sells most of its products to countries in the European Union. Its target is sales of €
130mn by 2010.


EBRD first vice-president Noreen Doyle said this is the bank’s first post-privatisation restructuring project in Serbia and Montenegro helping private investors turn a previously state-owned company into a successful business. The EBRD is ready to support more investors with this type of commitment, says Doyle.


Moreover, the authorities should encourage the privatisation of other industries that can bring in much needed capital for state coffers and attract more foreign investment to promote the country’s transition towards a market economy, she adds.


EPH deals primarily in grain and metals. Its relationship with the mill began in 1995, when the plant was scarcely operational but EPH provided working capital and helped Sevojno maintain limited operations. EPH bought its stake as part of a consortium with Amalco, another Cyprus-based metals-trading company. The two companies paid €
3mn for 70% of the mill. The remaining shares are owned by employees and a government share fund.


The EBRD has worked with EPH since 1998, when the bank made a loan to its Romanian subsidiary, Silotrans.


Around €
2mn of the current loan will be funded by the Italian Risk Sharing Facility. This is a 2003 agreement under which the Italian government co-finances small and medium enterprises and restructuring projects in Serbia and Montenegro to provide the bank with a risk-sharing mechanism.