Exclusive report: Mining exploration investments in Serbia- problems, challenges and potentials for the state and the foreign investors

27. February 2013. / Mining

It can be done a lot, it is done a little and that what was done wasn’t done right- this sentence presents complete situation in the mining sector of Serbia. Serbia has completely decent reservoirs of natural resources, proportionally to its size and population. Moreover, these resources are a gold opportunity for export, besides satisfying our needs.

Foreign investors have obviously noticed better the information that there are 5 billion tons of coal in Pester, that value of nickel reservoirs is 100 billion euros, that there are coal slates in Aleksinac basin that can give 200 megatron of oil and that 20% of world’s lignite reservoirs are found in Serbia. What is the result of that Serbia doesn’t take this seriously? State loses millions of euros on ceding exploration rights to the reservoirs that have already been explored, it picks up crumps from the table with excavation of profitable minerals and it lets foreign companies catch hold of right to excavation without competition. There are many problems in this area. The most important problem is whether state is lazy or it doesn’t want to deal with these questions, what enables foreign investors to act as they want. Ecological problems follow this question, as well as uninformed public.

It is reasonable that state cannot catch hold of total gain because of the market liberalization, the fear of risky investment in high technologies that are too expensive and don’t let individual capital investment and to begin exploitation that cane give profit that was popular during socialism. State can limit investors in the profit sense so it can estimate how much state can take without refusing investments on that basis. Natural resources are on Serbian territory so state must look up to successful countries in this sector and estimate the ratio state-investor on the base of what the state would take the money from using resources and investor would benefit from excavation and sale of minerals.

We should know that if nobody in this sector doesn’t serve anyone, if there are no friendly concessions, if it is pure business investor wouldn’t benefit from it. State must show that it is stronger than any individual or organization. Besides, it cannot let raw materials to be exported in 100% of cases, production must be expended in the direction of processing industry where is bigger profit. We should surely consider the condition of our state and our own interests where individuals that are in charge of exploitation permission issuance are bribed in order to investor get better conditions and the state has millions’ losses. It is corruption problem that is present in the whole industry and it is one of the main challenges in the mining.

In ecological sense, Serbia cannot approve black spots to itself like some much bigger states like Russia, China, Canada that have large populated territories or poor countries like Philippines so the must commit investors with law that practice of transferring old and “dirty” technologies from rich countries to Serbia is out of question. We must go towards the purest exploitation technologies. The maximum of waste materials has to be determined and used terrains must be re-cultivated. In other words, we should avoid Kolubara, Bor, Majdanpek’s scenarios where state has had a wrong approach for years. These mines are visible on satellite records in the form of black spots, huge areas of Central Serbia became a big excavation, waste rock dumps. Re-cultivation and rehabilitation of ruined terrain is being not done in these mines, especially in Kolubara, the largest one. This is the main problem of every mine in our country.

This negligence of work performers is aloud because national companies work that way. Therefore, the main challenge in the future is how to start good exploitation in existing mines and put future investors into order. “There are two stales side by side. You can eat at one, and the other you can close right away. All depends on host’s behavior”, Director of the mine complex “Bor” Blagoje Spasovski explained  recently indicating the main point of the whole situation.

One of the more important reasons why the exploitation of minerals, whose resources have been researched, has stopped is uninformed public. Serbian citizens are taught with bad examples that are all over the Serbia and whose causals are state and private companies that have made huge damage to environment by doing the excavations in completely wrong way, so they are against any massive exploitation in their area. People looked at consequences of irresponsible and inappropriate work and they are convinced that the only direction the exploitation can go is destruction, migrations because of new excavations, and the picture of media that is in front of their eyes is grayness of smoke, excavated land and polluted water. Second reason for their fear is arrival of foreign capital that takes land away from people and makes them to work for little money. They believe that better way for exploitation doesn’t exist.
There is a much better way. It is a fact that pollution must be present, but it can and must be limited to minimum. The best possible technology should become standard. Hectares of waste rock and waste materials that are currently thrown away as overage must be used completely and land should be re-cultivated with plantings that can grow there. Law regulative must make clear to investors to excavate on Serbian territory and that Serbian citizens are working for them. Billion tons worth minerals in our country must become one of development engines for this country at this moment when it doesn’t manage to find an exit from economy crisis. Serbia has a chance to use its huge potential that developed countries have used a long time ago and to develop now when other countries are desperate because of crisis.

Source Serbia Energy Business Intelligence Desk

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