TIRANA, April 28 – The Albanian government says its package of incentives to give a boost to the ailing mining industry and prevent a further cut in production and employment will be ready by next month.
Industry Minister Damian Gjiknuri says the government will soon lift reference prices and unfreeze guarantees on investment and environment and take into account humidity and transport costs in the calculation of the mining royalty as part of its promised package of incentives to the country’s mining industry, dominated by chrome extraction and exports.
“A closed mine is not only financial loss for the enterprise. There are undoubtedly a considerable number of workers who are made redundant, missing revenue in the state budget and deteriorated economic indicators,” Industry Minister Gjiknuri told an international chrome conference held in Tirana this week.
Last September, a Turkish-Chinese consortium operating a copper plant in the northern Albanian district of Puka announced the suspension of its activity for one year due to a sharp decline in international prices, leaving hundreds of workers jobless.
Mineral prices during the past 18 months have dropped by 30 to 40 percent for chrome and copper and 77 for nickel, says the ministry.
The mining industry produced some 674,000 tonnes of minerals in 2014, worth about $175 million in 2014, with chrome accounting for three quarters of production and exports. Last year, saw a slight drop in production affected by a slump in commodity prices by investments were estimated at $39 million and the mining industry accounted for 64 percent of total employment in the industry.
“Albania is undoubtedly an investment destination. Apart from chrome, there are considerable reserves of iron-nickel,” minister Gjiknuri told investors.
Mining companies have complain they have been forced to cut production and staff as the current prices don’t even meet their extraction and transport costs to Durres Port, from where it is exported mainly to China.
The situation is more critical in the Bulqiza chromium mine and Fushe-Arrez cooper plant where hundreds of jobs have been cut to handle the sharp decline in international prices. Mining is one of the few job opportunities in the two poor northern small towns of Bulqiza and Fushe-Arrez, with thousands of households relying on it to make a living.
The royalty levied on chrome and copper stands at 6 percent, but producers claim they suffer extra costs due to humidity of the mineral which is not taken into consideration. They also claim the 6 percent royalty on domestic sales is collected after the 20 percent value added tax which increases their costs.
The extractive industry is expected to continue contracting by 1.9 percent in 2016 before returning to positive growth rates of 0.8 percent and 5.7 percent in 2017 and 2018, says the Albanian government in its 2016-2018 programme of economic reforms.
Mining has attracted a series of foreign investments to Albania including Canadian, Austrian, Turkish, and most recently Chinese ones.
Since 2013, the country’s biggest chromium mine of Bulqiza has been operated by Albanian-owned Balfin Group. The Bulqiza mine employs 660 people and currently has an annual output of 82,000 tonnes of the lumpy ore and fines.
