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The Government of the Republic of Serbia

In the service of citizens

Sales contract for RTB Bor worth $400m signed

Belgrade, 5 March 2007

Representatives of the Serbian government, the Serbian Privatisation Agency and Romania's Cuprom signed today the contract on the sale of assets of the mining and metallurgical complex RTB Bor worth $400 million, and a contract on the transfer of exploitation rights in the Bor mining basin.

From left: Horia Simu, Radomir Naumov and Vladimir Galic

Serbian Minister of Energy and Mining Radomir Naumov signed the contract on behalf of the government and Privatisation Agency's Director Vladimir Galic on behalf of the agency. As for RTB Bor and Cuprom International and Cuprom S.A., the contract was signed by their authorised representatives.

Naumov told a press conference that the contract envisages a minimum of obligatory investments of up to $181.2 million, adding that depending on the buyer's assessments, there is a possibility of investing an additional $45 million.

He said that the contract includes provisions on social welfare according to which none of the 4,500 employees will be fired within the next three years. If certain employees are declared surplus, Cuprom will provide severance payments of €400 per year of service, he explained.

The Minister said that in line with the Law on privatisation, the state is under obligation to invest up to $80 million in the clear-up of the land and improvement of ecological situation in Bor, whereas the buyer will cover all the expenses if they exceed this amount.

Naumov also said that RTB Bor's new owner will pay a fee for the exploitation of minerals, in line with the law.

The Minister said he is pleased that through the engagement of the government, the World Bank and expert organisations RTB Bor has finally been sold and recalled that temporary measures were introduced in the company in 2001 and that the most often heard proposals at the time supported the idea that the mining complex be closed.

Instead, in 2005 the government decided to begin the company's restructuring, adopted a privatisation strategy and decided to sell only the assets of RTB Bor, he explained.

Radomir Naumov, right, shakes hands with Horia Simu after signing sales contract

Serbian Minister of Economy Predrag Bubalo told the press conference that Serbia sold assets to the Romanian company, but that the money will be used to cover around two-thirds of the RTB Bor's debts towards creditors, which amount to approximately $600 million.

Bubalo specified that the biggest creditor is the state with 70% of the total debt of the mining complex. He added that the government refused to guarantee low price of electricity to Cuprom for several upcoming years.

Cuprom President Horia Simu said that the modernisation of the industrial complex will be a time-consuming process.

He said that this company with production in Romania and Serbia will become one of the stable "players" in the copper industry in Europe.

Simu bought Cuprom three years ago in the condition in which RTB Bor is now, but after introducing modern technologies, last year it reached a turnover of $112 million.

The tender for the sale of RTB Bor was called on September 1 last year, and the minimum price for the purchase of copper mines Bor and Majdanpek, and companies Topionica and Rafinacija in Bor was $266.7 million.

Cuprom won at the tender, offering $60 million more than the consortium of the Cypriot company "East Point" and London Investment Fund ORN, which offered $340 million.

"Amalko Ltd" from Cyprus was third-ranked, offering $288 million.