2008 Minerals Yearbook

U.S. Department of the Interior December 2010 U.S. Geological Survey Th e Mi n e r a l In d u s t r y o f Se r b i a By Mark Brininstool

Serbia remained a modest producer of mineral commodities Commodity Review and its output was not significant in terms of world production. Within the Southern Balkans, the country was an important Metals producer of such metals as copper ore and refined copper, pig iron and crude steel, and refined products. On Copper.—As in 2007, the main story concerning the copper February 18, 2008, the Serbian Province of Kosovo declared its industry in Serbia in 2008 was the attempted privatization of independence. Since the end of the 78-day-long NATO bombing Rudarsko Topionicki Bazen Bor (RTB Bor). In early 2007, campaign in June 1999, which was aimed at ending fighting Romanian copper producer Cuprom S.A. won the original in Kosovo, the Province had been under the administration of tender for the purchase of RTB Bor but failed to complete the the United Nation’s Interim Administration Mission in Kosovo purchase. In November 2007, Austria’s A-TEC Industries AG (UNMIK). The U.S. Government has recognized Kosovo’s (A-TEC) was named the winner of a second tender with a bid independence and, therefore, Kosovo is included as a separate of $466 million and an agreement to make $180 million in country in the U.S. Geological Survey’s Minerals Yearbook investments in RTB; the bid was accepted by the Government in 2008. Consequently, only the economic and mineral production February 2008. After having trouble obtaining financing for the data for Serbia are included in this report; the data for Kosovo investment, A-TEC submitted a proposal in April to reschedule are included in a separate report for Kosovo. payments for the purchase of RTB. The company cited difficult international financial market conditions and concerns about Minerals in the National Economy Serbia’s economic and political stability following protests that took place after Kosovo’s declaration of independence in Preliminary data show that Serbia’s gross domestic product February as reasons for the company’s difficulty in obtaining (GDP) increased by 5.5% in 2008. and quarrying credit for the purchase of RTB Bor. A lawsuit against RTB Bor made up about 1.3% of the GDP in 2008, which is the same by Greek company Mytilineos Holding S.A. seeking $65 million percentage as in 2007, and mining of and peat made up for debts incurred by RTB Bor further complicated the matter. about 77% of the total value of mining and quarrying. In 2008, A-TEC’s proposal to reschedule its payments was rejected the value of exports from mining and quarrying increased by by the Government, and the Government offered the option about 12% to $64 million and the value of imports increased to purchase RTB Bor to Strikeforce Mining and Resources by about 45% to $3.6 billion compared with those of 2007. The Ltd. (SMR), which was a subsidiary of the Russian company large trade deficit in mining and quarrying was mainly owing to Basic Element. SMR had placed second in the November 2007 imports of crude petroleum and gas products (including service tender with a bid of $370 million and a promise to invest more activities), which were valued at about $3.1 billion in 2008 and than $400 million in RTB Bor, but at the end of April 2008, $2.1 billion in 2007 (Statistical Office of the Republic of Serbia, SMR abandoned attempts to purchase the company after the 2009, p. 126-127; 297-298). Privatization Agency of the Republic of Serbia (the Privatization Agency) requested that SMR improve its offer (Associated Production Press, 2008; A-TEC Industries AG, 2008a, b; Basic Element, 2008; Schwarz, 2008). Serbia’s level of production of several metals changed After its attempts to sell RTB failed, the Privatization significantly in 2008. Production of secondary magnesium Agency changed its strategy and sought a strategic partner to metal, secondary refined lead, and secondary aluminum purchase 67% of RTB. The minimum bidding price was set at decreased by about 25%, 17%, and 15%, respectively. $300 million and bids were due by January 30, 2009. The offer Production increased for copper content of concentrate (by failed to attract potential investors and, in February 2009, the 14%), crude steel (by 12%), and primary refined copper and pig Privatization Agency again changed the conditions for the sale iron (by 7% each). In this report, production data for industrial by offering a 40% stake in the company with a minimum bid of minerals are estimated for most minerals, although reported $116 million (Privatization Agency of the Republic of Serbia, data were available for the production of lime, which decreased 2008, 2009; B92, 2009). by 9%, and cement, which increased by about 6%; for mineral Exploration activities by foreign companies for copper fuels, an increase of 15% in production of brown coal was the continued in 2008. Canadian companies Dundee Precious only significant production change (table 1). Metals Inc., Empire Mining Corp., and Euromax Resources Ltd. were all actively exploring in Serbia in 2008, although no Structure of the Mineral Industry significant results were reported. Iron and Steel.—In 2008, crude steel production increased Table 2 is a list of Serbia’s major mineral industry facilities. by about 12% compared with that of 2007 because maintenance work at U.S. Steel Serbia d.o.o.’s plant in 2007 had reduced production for that year. Despite the increase in steel production

Serbia—2008 29.1 in 2008, full production capacity was not achieved owing to conditions for the formation of a joint venture that would build the relining of U.S. Steel Serbia’s blast furnace Number 1 and and operate the portion of the pipeline reduced demand for steel in the fourth quarter as a result of the that would run through Serbia. The Basic Agreement gave 51% worldwide economic slowdown. In December 2008, U.S. Steel ownership of the joint venture to and 49% to Srbijagas. Serbia announced that it would temporarily suspend production The issue of the pipeline’s capacity in Serbia was to be decided beginning in January 2009 because of the continuing reduction after a final economic assessment of the project, but the Basic in demand for steel owing to the world economic crisis. Agreement guaranteed that the pipeline would have a minimum According to the World Steel Association, steel production in capacity of 10 billion cubic meters per year, despite the Serbian Serbia averaged about 161,000 metric tons per month (t/mo) Government’s efforts to raise the minimum capacity to more from January through September, but only about 72,000 t/mo than 20 billion cubic meters per year. A second energy-related from October through December (B92, 2008; U.S. Steel Corp., agreement signed by the three parties was a memorandum of 2009, p. 61, F-57; World Steel Association, 2009). understanding (MOU) to undertake an economic assessment of Molybdenum.—The completion of an independent NI 43-101 an underground gas storage facility to be built at . resource estimate for Dundee’s Surdulica molybdenum-rhenium The MOU would give Gazprom 51% ownership and Srbijagas project in southeastern Serbia reported inferred resources of 49% ownership in a joint venture to construct and operate the 106 million metric tons (Mt) grading 518 parts per million Banatski Dvor facility if planned economic assessments were (ppm) molybdenum (0.052%) and 0.16 ppm rhenium. In the to result in positive findings (Interfax Ltd., 2008b, p. 22; OAO fourth quarter of 2008, Dundee halted all activities in Serbia to Gazprom, 2008). reduce the company’s expenses during the slowdown in the global In addition to the agreements mentioned above, a purchase metals market (Dundee Precious Metals Inc., 2009, p. 4, 24). and sale agreement for shares of the state-owned Serbian petroleum and natural gas monopoly, Naftna Industrija Mineral Fuels Srbije-Naftagas a.d. (NIS-Naftagas) was signed by the Chairman of the Board of the Gazprom subsidiary JSC , and Coal.—Total coal production in 2008 was about 38.65 Mt, Serbia’s Energy Minister. The final agreement maintained the which was a 4% increase compared with that of 2007. PD RB terms established in January 2008, and sold 51% of NIS-Naftagas d.o.o. began removing overburden for the new Veliki to Gazprom for 400 million euros (€) (about $590 million) and Crljeni Mine that was scheduled to begin production in the investments of an additional €500 million (about $740 million) second half of 2009, and investments in operating mines were in the company before 2012. Approval from the Serbian planned to maintain 2008 levels of production. In October, Antimonopoly Office was still necessary, and its decision would the EFT Group announced that it hoped to receive permits come at the latest by May 1, 2009. The terms of the sale of the to exploit lignite deposits near Cukara in central Serbia and shares of NIS-Naftagas had been controversial and had delayed that it was considering the construction of a 132-megawatt the finalization of the agreements signed on December 24, 2008 thermal powerplant near the proposed lignite mine. EFT Group (Interfax Ltd., 2008c, p. 22; OAO Gazprom, 2008). estimated that the deposit contained about 50 Mt of lignite and The basis for the agreements was formed on January 25, 2008, expected to invest about $160 million to develop the mine. The when the Serbian Minister and the Russian mine could employ about 600 people and produce 1.1 Mt of Industry and Energy Minister signed an agreement on lignite annually to supply the thermal powerplant (EFT Group, cooperation in the oil and gas industry, and the Serbian 2008; Electric Power Industry of Serbia, 2009, p. 31-33). Infrastructure Minister and the General Director of Gazprom Natural Gas and Petroleum.—Serbia was dependent on Neft signed a protocol establishing conditions for the sale of 51% imports to meet its demand for crude petroleum and natural of NIS-Naftagas to Gazprom. The conditions outlined in these gas. In 2008, the country reported imports of 2,584,759 metric two agreements were eventually used in the final agreements tons (t) (about 18.8 million barrels) of crude petroleum signed on December 24, but the conditions for the purchase of valued at $1.9 billion and 1,548,551 t of natural gas (about NIS-Naftagas became an obstacle for making the agreements 1.9 billion cubic meters) valued at $947 million. Imports of final. Critics, including the Serbian Minister of Economy and crude petroleum decreased by 0.05% in terms of volume, but Regional Development, claimed that the purchase price was too increased by 45.34% in terms of value compared with imports low and that greater guarantees were needed to ensure that the in 2007. Natural gas imports increased by 6.53% in terms of South Stream pipeline would run through Serbia if the sale of volume and by 50.14% in terms of value compared with imports NIS-Naftagas was completed. The Minister of Economy and in 2007. Serbia imported about 89% of its crude petroleum and Regional Development had also suggested that Gazprom should 98% of its natural gas from (Statistical Office of the buy a portion of its shares from NIS-Naftagas employees and Republic of Serbia, 2009, p. 306). the public based on the international accounting and consulting On December 24, representatives of OAO Gazprom (a Russian firm Deloitte & Touche’s €2.2 billion ($3.2 billion) estimated state-owned oil and gas company), the Serbian Government, value of NIS-Naftagas (Interfax Ltd., 2008a, b). and Srbijagas (the Serbian state-owned company responsible for gas transportation, distribution, storage, and trade) signed Outlook documents that made final a number of energy deals that had been negotiated throughout the year. The Major Provisions of the Basic Mineral production in Serbia is expected to remain small Cooperation Agreement (the Basic Agreement) established the by world standards, but if the Government is able to sell a

29.2 u.s. geologicAl survey minerals yearbook—2008 substantial portion of RTB Bor and attract further investments, Electric Power Industry of Serbia, 2009, Annual report 2008: Electric output of copper and efficiency in production could increase. Power Industry of Serbia, June, 73 p. (Accessed October 20, 2009, at http://www.eps.rs/publikacije/godisnji_izvestaji/EPS Annual report 2008.pdf.) This would in large part depend on improvements in the world Interfax Ltd., 2008a, Gazprom Neft gets 51% of NIS, Serbia secures South economic situation and relaxation of credit constraints. Also, Stream section: Interfax Russia & CIS Oil and Gas Weekly, v. 822, no. 4, the sale of a controlling share of NIS-Naftagas to Gazprom and January 24-30. the agreed-upon investment requirements has the potential to Interfax Ltd., 2008b, Gazprom Neft must buy shares in Serbia’s NIS from public—: Interfax Russia & CIS Oil and Gas Weekly, v. 850, no. 34, increase the output of refined petroleum products in Serbia. September 4-10. Interfax Ltd., 2008c, Russia, Serbia sign energy cooperation deals: Interfax References Cited Russia & CIS Oil and Gas Weekly, v. 865, no. 49, December 18-24, 56 p. OAO Gazprom, 2008, Gazprom and Serbia sign fundamental documents Associated Press, 2008, Serbia cancels deal for Serbian copper complex: defining cooperation in energy sector: OAO Gazprom press release, International Herald Tribune, April 10. (Accessed February 10, 2009, at December 24. (Accessed October 21, 2009, at http://www.gazprom.com/ http://www.iht.com/articles/ap/2008/04/10/business/EU-FIN-Serbia-Copper- press/news/2008/december/article64442/.) Deal.php.) Privatization Agency of the Republic of Serbia, 2008, Public invitation for A-TEC Industries AG, 2008a, A-TEC announces breakdown of talks on participation in the public tender for selection of a strategic partner for RTB RTB Bor acquisition: A-TEC Industries AG press release, April 4. Bor Group: Privatization Agency of the Republic of Serbia, November 8. (Accessed October 22, 2009, at http://www.a-tecindustries.com/en/press/ (Accessed October 22, 2009, at http://www.priv.yu/.) pressreleases/?archive=2008.) Privatization Agency of the Republic of Serbia, 2009, Public invitation for A-TEC Industries AG, 2008b, A-TEC to acquire RTB Bor: A-TEC selection of a strategic partner for RTB Bor Group: Privatization Agency Industries AG press release, February 7. (Accessed October 22, 2009, at of the Republic of Serbia, November 8. (Accessed October 22, 2009, at http://www.a-tecindustries.com/en/press/pressreleases/?archive=2008.) http://www.priv.yu/.) B92, 2008, U.S. Steel to suspend production temporarily: B92, Schwarz, Alexandra, 2008, Update 4—A-TEC pulls out of deal to buy December 19. (Accessed June 11, 2009, at http://www.b92.net/eng/news/ Serb miner Bor: Reuters, April 4. (Accessed October 22, 2009, at comments.php?nav_id=55852.) http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/ B92, 2009, RTB Bor to go under hammer for 4th time: B92, idUSL0484126820080404.) February 27. (Accessed October 22, 2009, at http://www.b92.net/eng/news/ Statistical Office of the Republic of Serbia, 2009, Statistical yearbook of Serbia -article.php?yyyy=2009&mm=02&dd=27&nav_id=57482.) 2009: Belgrade, Serbia, Statistical Office of the Republic of Serbia, October, Basic Element, 2008, SMR is quitting the tender on RTB Bor acquisition: 484 p. (Accessed November 19, 2009, via http://webrzs.statserb.sr.gov.yu/ Basic Element press release, April 30. (Accessed October 22, 2009, at axd/en/god.htm.) http://www.basel.ru/en/structure/resources/2008/news_30_04_2008/.) U.S. Steel Corp., 2009, Annual report and form 10-K: United States Steel Corp., Dundee Precious Metals Inc., 2009, Management’s discussion and analysis of March, 173 p. (Accessed October 23, 2009, at http://www.uss.com/corp/ consolidated financial conditions and results of operations for the financial proxy/documents/2008_annual_report-v2.pdf.) year ended December 31, 2008: Dundee Precious Metals Inc., February, 26 p. World Steel Association, 2009, Steel statistics—Total 2008: World Steel (Accessed October 23, 2009, at http://www.dundeeprecious.com/Theme/ Association. (Accessed May 20, 2009, at http://www.worldsteel.org/ Dundee/files/annual_report/MDAYE08.pdf.) ?action=stats&type=steel&period=latest&month=13&year=2008.) EFT Group, 2008, EFT to invest in Cukara coal mine in Serbia: EFT Group, October 28. (Accessed September 4, 2009, at http://www.eft-group.net/ news_latest/en/2008_10_28.htm.)

Serbia—2008 29.3 TABLE 1 SERBIA: PRODUCTION OF MINERAL COMMODITIES1

(Metric tons unless otherwise specified)

Commodity2 2004 2005 2006 2007 2008 METALS Aluminum ingot, secondary 517 328 1,219 1,544 1,317 Copper: Mine and concentrator output: Ore, gross weight thousand metric tons 5,495 6,005 5,775 6,867 8,680 Concentrate, Cu content 12,200 12,900 12,000 16,500 18,800 Metal: Blister and anodes: Primary 13,900 30,000 40,000 30,200 31,900 Remelted 1,100 1,000 1,000 1,000 1,000 Total 15,000 31,000 41,000 31,200 32,900 Refined: Primary 10,900 30,100 40,000 30,600 32,800 Remelted 1,100 1,000 1,000 1,000 1,000 Total 12,000 31,100 41,000 31,600 33,800 Gold, refined kilograms 176 335 450 e 500 500 e Iron and steel, metal: Pig iron 959,019 1,115,195 1,529,177 1,485,000 1,582,000 Crude steel 1,167,000 1,286,000 1,837,000 1,478,000 1,662,000 Semimanufactures 1,543,453 1,890,330 2,379,918 2,431,380 2,393,430 Lead: Ore: Gross weight (Pb-Zn ore) 180,000 162,000 172,000 198,000 202,000 Pb content 1,000 1,000 1,000 1,000 1,000 e Metal, secondary, refinede 2,000 r 2,400 r 2,600 r 1,200 r 1,000 r Magnesium, metal, secondarye 1,500 1,500 1,500 2,000 1,500 Platinum-group metals:e Palladium kilograms 19 3 19 3 15 15 15 Platinum do. -- 3 3 3 2 2 2 Seleniume do. 5,170 3 8,315 3 7,500 7,500 7,500 Silver, mine output, Ag content do. 1,036 2,648 2,200 e 4,150 4,000 e Zinc: Concentrator output, gross weighte 3,800 2,600 6,200 3,000 3,000 Zn content of concentrate 1,000 1,000 2,000 1,000 1,000 e Refined 4,000 18,000 r 15,000 -- -- INDUSTRIAL MINERALS Asbestos, ore 7,300 e 4,080 4,500 -- -- Cement thousand metric tons 2,240 2,276 2,565 2,677 2,843 Clays:e Ceramic clay 25,000 25,000 30,000 30,000 30,000 Fire clay: Crude 30,000 30,000 40,000 40,000 40,000 Calcined 10,000 10,000 10,000 10,000 10,000 Kaolin, crude 95,000 95,000 110,000 110,000 110,000 Feldspar, crudee 3,500 3,500 3,500 3,500 3,500 Gypsum, crudee 45,000 45,000 45,000 45,000 45,000 Lime thousand metric tons 400 e 400 e 377 320 292 Magnesite:e Crude do. 20 20 20 20 20 Caustic calcined 1,500 1,500 1,500 1,500 1,500 Mica, all gradese 200 200 200 200 200 Nitrogen, N content of ammoniae 138,000 111,000 80,000 85,000 50,000 Pumice and related volcanic materials, volcanic tuffe 100,000 100,000 100,000 100,000 100,000 Salt, all sources 50,000 35,000 r 29,847 r 30,023 30,115 See footnotes at end of table.

29.4 u.s. geologicAl survey minerals yearbook—2008 TABLE 1—Continued SERBIA: PRODUCTION OF MINERAL COMMODITIES1

(Metric tons unless otherwise specified)

Commodity2 2004 2005 2006 2007 2008 INDUSTRIAL MINERALS—Continued Sand and gravel, excluding glass sand: As reported thousand cubic meters 1,500 7,556 8,633 8,732 8,669 Convertede thousand metric tons 2,400 12,000 13,700 13,900 13,800 Silica:e Quartz sand 260,000 260,000 260,000 260,000 260,000 Glass 80,000 80,000 80,000 80,000 80,000 Sodium compounds:e Caustic soda 6,000 7,000 7,000 7,000 7,000 Sodium sulfate 800 800 800 800 800 Stone, excluding quartz and quartzite, dimension, crude:e Ornamental square meters 70,000 70,000 70,000 70,000 70,000 Crushed and broken, n.e.s.4 thousand cubic meters 2,000 2,000 2,000 2,000 2,000 Other, stone blocks cubic meters 500 500 500 500 500 Sulfur, byproduct:e Metallurgy thousand metric tons 50 50 50 50 50 Petroleum do. 1 1 1 1 1 Total do. 51 51 51 51 51 MINERAL FUELS AND RELATED MATERIALS Coal: Bituminous thousand metric tons 50 65 65 66 66 Brown do. 352 363 316 204 235 Lignite do. 35,192 34,565 36,404 36,803 38,284 Total do. 35,594 34,993 36,785 37,073 38,585 Natural gas, gross production million cubic meters 317 320 282 274 282 Petroleum: Crude: As reported thousand metric tons 652 648 654 639 636 Convertede thousand 42-gallon barrels 4,840 4,810 4,850 4,740 4,720 Refinery products As reported thousand metric tons 2,639 2,582 2,508 2,502 2,470 Convertede thousand 42-gallon barrels 21,100 20,700 20,100 20,000 19,800 eEstimated; estimated data are rounded to no more than three significant digits; may not add to totals shown. rRevised. do. Ditto. -- Zero. 1Table includes data available through December 7, 2009. Data are for Serbia only; no data are included for Kosovo, which declared its independence in February 2008. 2In addition to commodities listed, common clay and diatomite also are produced, and tellurium may be recovered as a copper refinery byproduct, but available information is inadequate to make reliable estimates of output. 3Reported figure. 4Not elsewhere specified.

Serbia—2008 29.5 TABLE 2 SERBIA: STRUCTURE OF THE MINERAL INDUSTRY IN 2008

(Thousand metric tons unless otherwise specified)

Major operating companies and major Annual Commodity equity holders Location of main facilities capacity Antimony: Ores and concentrates Farmakom M.B. Mines and mills near Zajaca NA. Do. do. Mines and mill at Rajiceva Gora NA. Metal do. Smelter at Zajaca NA. Cement Becinska Fabrika Cementa (Lafarge and Plant at Beocin 2,000. Asamer Holding AG) Do. Holcim (Srbija) a.d. Plant at Popovac 1,400. Do. Cementara Kosjeric (Titan Group, 96%) Plant at Kosjeric 700. Coal: Bituminous JP PEU Underground mines at Vrska Cuka and 100. Baljevac Brown coal do. Underground mines at Resavica, Soko Banja, 400. , Krepoljin, and Stavalj Lignite PD RB Kolubara d.o.o. (Electric Power Opencast mines: Polje B, Polje D, Tamnava 32,000. Industry of Serbia) East and Tamnava West near Vreoci Do. TE-KO Kostolac d.o.o. (Electric Power Opencast mines: Cirikovac, Drmno, and 8,000. Industry of Serbia) Klenovnik Do. JP PEU Resavica Underground mine at Lubnica 60. Copper: Metal Rudarsko Topionicki Bazen Bor (RTB Bor) Smelter at Bor 170. Do. do. Electrolytic refinery at Bor 170. Mine production, Cu content of concentrate do. Mine and mill "Jama" at Bor 8. Do. do. Mine and mill at Majdanpek 65. Do. do. Mine and mill at Veliki Krivelj 35. Lead-zinc ore Contango d.o.o. Mine and mill at Rudnik 250, ore. Do. Farmakom M.B. Mines at Lece, Rajiceva Gora, Ravnaja, and 350, ore. Suva Ruda Do. Mineco Ltd. Mine at Veliki Majdan, near Ljubovija 60, ore. Do. NA Grot Mine near Vranje 300, ore. Do. NA Mill at Kriva Feja NA. Lime Jelen Do a.d. Plant in Jelen Dol, west of Cacak 80. Do. U.S. Steel Serbia d.o.o. Plant at Kucevo NA. Do. Ravnaja AD Plant at Mali Zvornik NA. Magnesite, concentrate Rudnici Magnezita "Sumadija" Mine and plant at Sumadija, 120. 20 kilometers northwest of Cacak Do. MG Serbien d.o.o. Bela Stena, near Baljevac NA. Magnesium, metal: Primary do. do. 8,500. Secondary do. do. 12,000. Natural gas million cubic meters Naftna Industrija Srbije-Naftagas a.d. Gas is produced from about 110 wells 300. (NIS-Naftagas)1 throughout northern Serbia Petroleum: Crude thousand 42-gallon Naftna Industrija Srbije-Naftagas a.d. Crude petroleum is produced at about 800 wells; 15. barrels per day (NIS-Naftagas)1 the main oilfield is located in northeast Serbia Refined Naftna Industrija Srbije-Naftagas a.d. (NIS-Naftagas):1 Rafinerija Nafte Pancevo Refinery at Pancevo 4,800. Do. Rafinerija Nafte Refinery at Novi Sad 2,600. Pig iron U.S. Steel Serbia d.o.o. Blast furnace at Smederevo NA. Steel, crude do. Plant at Smederevo 2,200. Zinc, metal Hemijska Industrija Zorka Electrolytic plant at Sabac 30. Do., do. Ditto. NA Not available. 1In December, 2008, JSC Gazprom Neft and the signed a purchase agreement for a 51% interest in the Serbian company Naftna Industrija Srbije-Naftagas a.d., but the purchase was not made final until February 2009.

29.6 u.s. geologicAl survey minerals yearbook—2008