Bosnian steel mill spurs trade in war-torn Balkans

ArcelorMittal, the world's largest steel company, has revived the mill with a $280 million investment.

from the March 3, 2008 edition

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Zenica, a stronghold of the Bosniaks (or Bosnian Muslims) during the war, is in the Federation, while ArcelorMittal's iron mines are located in Republika Srpska. One of the mines is in Omarska and was the site of the Bosnian Serb's infamous wartime concentration camp. Serbs, for their part, remember Zenica as the wartime center of foreign mujahideen fighters, who committed atrocities against civilians – making ArcelorMittal's transethnic supply chain from mine to mill an uncertain venture. "We will really be testing the waters," says Mr. Srinivasan.

To date, one of the biggest challenges has been the electricity supply, which Srinivasan says is unreliable and overpriced. "We have been very disappointed with the situation," he says. "I wish we had more smart economic people in the government who understood that we are a major driver in the economy and you can't be exploiting us with high rates."

But local experts don't share his view of the mill as a key player. Nino Serdarevic, a University of Zenica economist, says that the steel mill has played only a minor and indirect role in the city's recovery. "Before the war the steel mill employed 23,000 workers and indirectly supported 80,000 of Zenica's 87,000 inhabitants," he says. At present it employs 2,700, whom Mr. Serdarevic says are paid an average salary of $390; the Federation average is $500.

"It's a huge investment, but it hasn't supported any improvement in the local economy," he says. The main benefit has been indirect: ArcelorMittal's investment has anchored the local government's low-rent business zone – home to a number of small businesses – and attracted industrial firms like Slovenian car-parts-maker Cimos, which plans to employ 600.

ArcelorMittal has also generated plenty of ill will, accused of having low wages, a lax safety culture, and a spotty environmental record. On two occasions last year, deliveries of radioactive scrap metal were discovered at the mill. Last summer, mill workers, some of whom are paid under $1.60 an hour, held an unsuccessful general strike for higher wages from the firm – whose Indian-born founder, Lakshmi Mittal, is Britain's richest man.

ArcelorMittal facilities in Eastern Europe have experienced a chain of fatal accidents that have killed 91 miners in Kazakhstan and 25 mill workers in Romania since 2001. At the Zenica mill last year, three workers died in a gas leak.

Srinivasan says the company puts a high priority on safety. "I won't say that everything has improved, but we have an agenda and we're working hard on it." And the public believes him, Serdarevic adds.

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