Bosnia railway strike hits metals sector

"We had to halt the operation today since our storage space is full. It would take at least five days to restart the work once the traffic is restored," said Murari Mukherjee of ArcelorMittal Prijedor irone ore mine.

The week-long strike, which has prevented the company from delivering supplies to its customers, has cost the mine 160,000 euros ($221,840) per day and has also incurred damage to its customers, he told reporters.

The strike has also choked supplies of feedstock for the Balkan country's sole steelmaker, ArcelorMittal Zenica, located in the Muslim-Croat federation, Bosnia's other autonomous half.

"The steelmaker was running out of ingots needed for normal operation and also had to stop its coking unit," Mukherjee said.

ArcelorMittal Zenica had said it expected to return to pre-crisis production levels of 650,000 tonnes of steel this year and increase it by 10 percent in 2012.

For the fourth time in just under a year, cargo and passenger traffic came to a standstill last week after engine drivers went on strike over the refusal by management at the indebted company to increase their pay.

The strike has also hurt operations of alumina plant Birac in the eastern town of Zvornik, majority-owned by Lithuania's Ukio Bank Investment Group, and metal pipe plant Unis in the northern town of Derventa.

"The transport of raw materials and the output of these companies have stalled completely, and the railway company has been warned that all these plants may seek compensation for the damage caused by the strike," the Serb Republic Railway Company said in a statement.

It called for a minimum level of service until a solution is found. The metals sector is crucial in impoverished Bosnia, with exports accounting for about 80 percent of total industrial output.

Bosnia's industrial output increased 5.3 percent year-on-year in August, driven mainly by stronger activity in the metal-processing sector, indicating a recovery from negative trends caused by the global economic crisis.

Copyright Reuters, 2011