2014 Minerals Yearbook CROATIA U.S. Department of the Interior December 2017 U.S. Geological Survey THE MINERAL INDUSTRY OF CROATIA By Sinan Hastorun Croatia is a moderately developed country located in the Commission, 2015a, p. 86; International Monetary Fund, 2015, western part of the Balkan Peninsula. It has been a European p. 4, 25; World Bank, The, 2015a; 2015b, p. 2). Union (EU) member state since 2013, when it became only The mineral industry was an important but contracting the second country from the former Republic of Yugoslavia component of Croatia’s national economy, generating about after Slovenia to accede to the Union. Croatia has the 5.6% of the gross value added in 2012 (the last year for which longest coastline of the six countries bordering the Adriatic comprehensive data were available) compared with 5.3% in Sea and therefore among the Balkan countries, the largest 2011. Among its components, the manufacture of coke and offshore exclusive economic zone (EEZ) suitable for mineral refined petroleum products accounted for 2.2%; the manufacture fuel exploration. of fabricated metal products, except machinery and equipment, The country produced a limited number of mineral 1.4%; mining and quarrying, 0.7%; the manufacture of other commodities, none of which were produced in a quantity that nonmetallic mineral products, 0.7%; the manufacture of was significant on a world or regional scale. Mineral resources chemicals and chemical products, 0.4%; and the manufacture of included clays, dolomite, fertilizers, gypsum, limestone, natural base metals, 0.2%. The gross value added of the manufacture of gas, petroleum, and salt. Crude petroleum and natural gas coke and refined petroleum products increased by 12.2%; that of extraction and refining remained the major economic activities the manufacture of fabricated metal products, except machinery of Croatia’s mineral industry. The first international rounds of and equipment, by 2.6%; and that of mining and quarrying, by offshore and onshore hydrocarbon exploration licensing were 2.4%, respectively, compared with that of 2011. On the other launched in 2014. Crude steel output continued to increase hand, the gross value added of the manufacture of base metals after production restarted at ABS Sisak in 2013. Cement output decreased by 9.8%; that of the manufacture of chemicals and remained flat owing to stagnation in domestic construction chemical products, by 3.5%; and that of the manufacture of activity. The country remained reliant on mineral commodity other nonmetallic mineral products, by 0.8%, respectively, imports for the bulk of its industrial and energy needs. Most compared with that of 2011. As of December 2013, the mining industrial mineral output was consumed by the domestic market, and quarrying sector comprised 386 registered and 291 active particularly by the construction sector (European Commission, business enterprises and employed 5,262 people compared with 2011, p. 3; Agency for Investments and Competitiveness, 2013; 430 registered and 290 active enterprises and 5,593 employees Maćešić and Manovelo, 2014b; European Commission, 2015c; in 2012 (Croatian Bureau of Statistics, 2013, p. 81, 141; 2014, Rajal and Santic, 2015, p. 59; U.S. Department of State, 2015, p. 85, 147, 211–213). p. 6; World Steel Association, 2015, p. 2). Government Policies and Programs Minerals in the National Economy The minerals industry in Croatia is regulated by the Mining In 2014, Croatia’s economy continued to contract, albeit at a Department of the Energy and Mining Directorate and the slower rate than in 2013. The country’s gross domestic product Croatian Hydrocarbon Agency. The Mining Department (GDP) decreased by 0.4% in real terms in 2014 following a regulates and oversees all activities related to nonfuel 0.9% decrease in the previous year. The nominal GDP in 2014 minerals. It is responsible for issuing licenses for exploration was $57.2 billion, a slight decrease from $57.9 billion (revised) and extraction of all minerals except for mineral fuels, for in 2013. Croatia’s economy experienced 6 consecutive years issuing building permits for mining facilities and plants, and of recession since 2009, during which time the GDP decreased for granting approvals for mining concessions. The Croatian by 13% on a cumulative basis in the aftermath of the global Hydrocarbon Agency, which was established in February 2014 economic downturn of 2008. The country’s ongoing recession in accordance with the Act on the Establishment of the was primarily owing to lower domestic business investment Hydrocarbon Agency, is authorized to issue tenders and and lower domestic demand for goods and services. The permits for onshore and offshore exploration and exploitation construction sector contributed negatively to economic growth, of petroleum and natural gas resources. It also monitors the while industrial production made a positive contribution. fulfillment of contractual obligations by permit holders and Croatia’s current account balance remained positive in 2014, reports results to the European Commission. Finally, the Agency albeit at 0.1% of the GDP, which was lower than in 2013. The is responsible for documenting the hydrocarbon potential of trade deficit decreased to 15.4% of GDP as a result of higher Croatia (Croatian Hydrocarbon Agency, 2014; Directorate for exports of goods and services, particularly exports to other Energy and Mining, 2014; Rajal and Santic, 2015, p. 58). EU member states, and lower petroleum imports (by value) The Concession Act of 2012 (passed in November 2012), owing to the significant decrease in petroleum prices globally the Mining Act of 2013 (passed in April 2013), which in the second half of 2014. Foreign direct investment (FDI) replaced the Mining Act of 2009, and the Hydrocarbons in 2014 increased threefold compared with 2013 (European Exploration and Exploitation Act (Hydrocarbons Act) of 2013 CROATIA—2014 10.1 (passed in July 2013) are the principal laws governing all Salt production decreased by 22%. Mineral fuels, including mineral extraction activities in Croatia in accordance with the natural gas and petroleum, were produced, but their output Hydrocarbons Licensing Directive and the Carbon Capture and levels were not sufficient to wholly meet domestic fuel demand. Geological Storage (CCS) Directive of the EU. The Mining Crude petroleum output in 2014 decreased by 10% compared Act of 2013 defines the criteria, conditions, and requirements with 2013, and natural gas output decreased by 3% (table 1; for obtaining authorization to explore for and produce mineral Croatia.eu, 2014; European Commission, 2014a, p. 82). commodities in Croatia. It establishes a public tendering In 2014, total mining and quarrying production (by volume) procedure that is open to all interested entities, as required by decreased by 6.4%; mining support services activities, by 5.6%; the nondiscrimination clauses of the Hydrocarbons Licensing and energy, by 6.2%, while manufacturing output (by volume) Directive. The Concession Act of 2012 defines the conditions increased by 3.1%. The manufacture of coke and refined of public-private partnership projects. It establishes a clear petroleum products decreased by 13.2%; the manufacture of distinction between concession and public procurement fabricated metal products, except machinery and equipment, by contracts. The Hydrocarbon Act governs all onshore and 5.9%; and the extraction of crude petroleum and natural gas, offshore activities related to natural gas and petroleum in by 5.7%. The manufacture of basic metals increased by 8.7%; Croatia. Hydrocarbon exploration and extraction are regarded the manufacture of chemicals and chemical products, by 2.8%; as two separate rights, as is the case with all other minerals; and the manufacture of nonmetallic mineral products, by 0.9%. however, the tender procedure awards successful bidders an Mineral fuels including petroleum, natural gas, and condensate exploration license and an automatic right to a concession in were estimated to have accounted for most of the total value of the case of discovery (European Bank for Reconstruction and mineral production in Croatia. Industrial minerals, including Development, 2013, p. 6; Maćešić and Manovelo, 2013; Rajal construction stone, dimension stone, and carbonate mineral and Santic, 2015, p. 58). raw materials for industrial processing, made up only a small The Act on Strategic Investment Projects of November 2013 share of total mineral output (by value) (Lismore-Scott, 2013; sets up a one-stop shop to incentivize investment into sectors Croatian Bureau of Statistics, 2015b, p. 17, 18). of national importance, including energy and utilities. The law specifies detailed investment, technology, and employment Structure of the Mineral Industry criteria for private, public, or public-private partnership projects to qualify as being of strategic importance and to All mineral producers were wholly privately owned, except receive financial support from the Government. It establishes for mineral fuel producer INA-Industrija nafte d.d. (INA) and a streamlined administrative process for expedited issuance fertilizer producer Petrokemija d.d. INA was jointly owned by of permits for such projects by excluding lower level the Government (44.84%), Magyar Olaj-és Gázipari (MOL) administrative bodies from the approval process. The Act on Group of Hungary (49.08%), and others (6.08%). Petrokemija Amendments to the Act on Strategic Investment Projects of was jointly owned