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28/02/2024
Mining News

The Bosnia Government Treat For The World’s Ore Traders

The Zenica-Doboj Canton favored the company Adriatic Metals, awarding them concessions in Vareš thus depriving the budget of nearly five million marks. In return, illegal stone mining and road reconstruction left the locals with a devastated picnic area and stream.

The noise of heavy construction machines on the border between Vareš and Kakanj disturbs the harmony of nearly pristine nature at the doorstep of the Trstionica virgin forest. The forest stream has already been devastated, and the animals are in danger because a foreign mining company expects to make money from the bowels of Bosnian soil.

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The mine of the British company Adriatic Metals has not even started working but ten years of their exploration and preparatory work have already left behind destroyed nature. However, locals are most concerned about the water that supplies Kakanj.

The Zenica-Doboj Canton authorities granted the company a concession for the exploration and exploitation of ores, accommodating the interests of investors to the detriment of public budgets.

CIN reporters revealed that in 2018, this company – which was called Eastern Mining at the time – got the concession six times cheaper than domestic companies, thus depriving citizens of about five million marks.

“Everything will be contaminated. All for a fistful of gold?! It’s not worth a fistful of gold”, warns Dalibor Ballian, a professor from the Sarajevo University Faculty of Forestry.

Miscalculation

During the last decade, the government of the Zenica-Doboj Canton (ZDK) granted Adriatic Metals the use rights for about forty square kilometers (four thousand hectares) of land in Vareš for the exploration and exploitation of lead, zinc, and barite. The company has so far paid more than BAM 2.5 million in concession fees to the municipal and cantonal budgets.

In 2012, Miloš Bošnjaković, an Australian businessman originally from Tuzla, and his company Balkan Mining Pty Ltd bought the small Kreševo company MM Project, which would later become Eastern Mining.

In the spring of 2013, MM Project bought the DP Rudnik Olova, Zinka i Barita [Social Enterprise “Mine of Lead, Zinc and Barite] in Vareš aiming to start mining operations in this area.

“This was a prerequisite for participation in the public call of the Zenica-Doboj Canton. (…) To participate in the granting of the right to geological survey”, recalls Bošnjaković.

The first and basic concession contract was signed in March 2013. MM Project was granted a concession for 116.8 acres for BAM 1,500 per acre. It was only about three percent of the total area that the government will give them for use in the next ten years based on three annexes to the contract.

A month later, the Zenica-Doboj canton rendered a decision regulating this area for the first time and ordering that the concessionaires should pay a compensation of BAM 10,000 per acre for entering the estate, but as will turn out later, this rule did not apply to this company.

In 2017, Eastern Mining was bought by the British company Adriatic Metals Ltd. A year later, they signed the first annex to the basic contract with Zenica-Doboj Canton, adding a new 584 acres to the concession field – five times the area of the previous one. However, they did not pay the concession fee of BAM 10,000 per acre the Government set forth earlier. Instead, they were charged a concession fee of BAM 1,500 per acre, as they paid per the basic contract.

According to Bošnjaković, had the government insisted on a price of BAM 10,000 per acre, Eastern Mining project “would not have extended” [the area] by a single inch.

Nermin Ćosić, a former employee of the Ministry of Economy of Zenica-Doboj Canton who was involved in the concession granting process confirmed that the Government accepted the conditions of investors.

“Since they were taking that big piece of land, the amount of money they would need to pay would have been huge. Hence, right at the beginning we agreed with Easter Mining that this one-time concession fee should be some 10-15 pfennigs per square meter (BAM 1,000-1,500 per acre, author’s note), explained Ćosić.

Thus, Eastern Mining paid for the concession six times cheaper than other concessionaires. Had they paid the regular price of the concession, the budgets would be richer by about BAM 5 million.

In this case, the Zenica-Doboj Canton Attorney’s Office gave no opinion on awarding the concession at a lower price, although under the law the Government was required to request it. Public Attorney Seđad Kliko did not want to talk about it on record.

Since 2017, Adriatic Metals has been glorifying the importance of the project for the citizens of this region in the media and announcing works that are also supported by the local government.

In 2020, Easter Mining also received the largest piece of the field for exploration and exploitation, this time at a ten times lower price – BAM 150 per acre. The government previously passed a decision reducing the one-time concession fee for all concessionaires from BAM 10,000 to BAM 150. Thus, the concessionaire got the use rights for more than 3,200 acres of land for a fee of BAM 481,650.

The Ministry of Economy of Zenica-Doboj Canton explained that the one-time fee was reduced because the “continuous fee” that will be payable once the excavation works start has been increased. Under this decision, the continuous fee jumped from BAM 1.50 to BAM 3.90 per ton of mined ore. Eastern Mining has not yet started paying the compensation at the new price.

Adriatic Metals General Manager Paul David Cronin claims it was he who made this proposal to the Zenica-Doboj Canton Government.

“The government of Zenica-Doboj Canton has reduced the amount of the initial fee per acre to allow for greater exploration opportunities that would potentially lead to higher fees later if the exploration is successful”, said Cronin.

Former director Bošnjaković remembers the company’s business plans differently.

“When I was down there, Eastern Mining’s philosophy was the following: “Let us have it, and then we will explore and return to the state the parts we do not need or what the geological survey shows not to be economically viable.”

By the beginning of this year, the company paid about BAM 970 thousand into the budgets of Zenica-Doboj Canton and Vareš Municipality based on the continuous concession fee from the first contract. Under the basic contract, they were supposed to start paying in 2018, but the deadline for completing the preparatory work was extended. The minimum payments, which they were required to pay regardless of the quantities they mined, were getting due only two years later.

They will be paying the full fee for the remaining concession fields when they start mining ore, which is expected in November this year.

They last expanded the concession field with the third annex of the contract in 2022. They took 128 acres for exploration at the Saski Do site. Shortly after that, they changed their name to Adriatic Metals BH. They made a one-time payment of BAM 19,200 for the additional fields.

In the view of the Zenica-Doboj Canton MP Sanja Renić, no country would allow a higher fee for sowing potatoes than for metal mining, as Zenice-Doboj Canton decided in this case.

“The concession fee for agricultural land is BAM 400, while the fee for gold exploitation is BAM 150 (…) This is not in line with good management practice in Canton”, said Renić, who claims this was about favoring the concessionaire to the detriment of the canton.

In the third annex on expanding the area, for the first time, the “continuous fee” for mined ore has not been mentioned. According to Cronin, while they have no plans of mining there they paid the concession to prevent another company from coming to the area.

Solid road, fragile batching plant

With the arrival of Adriatic Metals in the mine on the border between the municipalities of Vareš and Kakanj, a new road from Vareš should have been built. Cronin says that Adriatic Metals is building a new road, but that work has stalled due to delays in obtaining the necessary permits.

In the meantime, the workers of Adriatic Metals come to the mine from the direction of Kakanj via the forest road, which was graveled and widened without permission for the needs of this company. The road along the potable streams of the Trstionica River and Vrući Potok was widened by the workers of the Kakanj company Trgošped with their subcontractors.

The owner of Trgošped Iso Zaimović confirmed that the works on the section Mehorić-Vrući potok were carried out for Adriatic Metals, but he could not talk about the details because he is bound to secrecy by a business contract.

Thus, six kilometers of gravel path was turned into a busy truck road to the detriment of the nearly pristine natural resources of Kakanj. “The road from the mouth of Vrući potok to Trstionica essentially did not even exist. It was a hiking trail”, recalls activist Hajrija Čobo.

The Kakanj Municipality Inspectorate received the first reports on graveling and widening of the forest road at the end of 2021. Amir Dedić, the head of the inspection in Kakanj, remembers his trips to the field towards Vrući potok: “The first time we went there, it was all forest. There was a small road [wide enough] for a jeep to pass. On our second visit, already the trucks could pass”

Forests and forest lands are a public good managed by forestry companies. According to Jasmin Dedić, director of the Zenica-Doboj Canton Forestry Company, this company did not grant any permission for the Mehorić-Vrući potok road.

However, the internal document sent from the Kakanj Forestry to the management of the company in Zavidovići, shows that they were aware of Trgošped and their subcontractors carrying out the works for Adriatic Metals.

“They provide various services for the needs of the future mine such as repairing truck roads, removing snow, repairing tractor roads and many other services, all on request and free of charge,” states the document signed by the head of the Kakanj Forestry, Emir Ibrahimspahić.

Forestry workers cut down 22 cubic meters of mostly healthy trees in October 2021 so that Trgošped could extract stone from the nearby quarry for paving the road. To justify this action, the Decision approving the tree-cutting project indicated that the trees were infested. They sold the cut fir and spruce to a private sawmill without proper documentation. Upon the launch of internal control, documentation was subsequently created to justify the timber trade.

Ibrahimspahić pleaded to the director of Forestry Company Jasmin Devedžić that due to frequent thefts, the wood was transported without delivery documents.

In the spring of 2022, inspectors found that in addition to exploiting stone and reconstructing roads, Trgošped installed a batching plant near the mine in Rupice without necessary permits and consent to support Adriatic Metals.

Inspector Dedić himself wondered how the plant could even start working: “I really do not know how it is possible, but obviously it is possible. This is why we use the term ‘illegal’ in our correspondence because it is illegal. There are no papers, no approvals.”

Consequently, the inspectors issued a BAM 1,300 fine and ordered Trgošped to obtain urban planning consent and approval for the construction of a batching plant and adjacent ground floor facility.

Cronin claims the company didn’t even know about the construction: “When we found out about it, we asked Trgošped to immediately remove it and restore that area.”

In an interview for CIN, inspector Dedić confirmed that the plant was equipped with a system for discharging wastewater, the so-called cement milk, into the stream. Although the batching plant did not have the necessary water permits, it continued to work, discharging wastewater into Vrući potok and the Trstionica River.

The inspectors determined the devastation of the rivers and the river area and ordered the restoration of the banks.

The fight for drinking water

The river Bukovica on the other side of the hill carries water from the local streams and springs of this region. It supplies water to about 37,000 inhabitants of Kakanj but environmental activist Hajrija Čobo says that this could become a problem because of the mine in Rupice.

“A minimum concession means nothing to me if I won’t have water to drink and I won’t have it. The works are carried out on a hill that is permeated with water like the body is permeated with veins. Once you release heavy metals into the groundwater, it’s over, there’s no going back,” warns Čobo.

In May 2021, the Kakanj public company Vodokom refused to give Eastern Mining consent for the exploitation and construction of the mine plant, corroborating this decision by the expert opinion provided by geological engineer Mirza Bašagić.

Bašagić revealed that the Study of the Mining Institute from Tuzla, which was attached to the request for approval by Eastern Mining, provides incorrect data. It states that the exploitation concession area does not enter the catchment area of the Bukovica River and that the Rupica deposit is located downstream of the water intake, and that future exploitation will not have an impact on the water intake.

“It is incomprehensible that such a renowned company as the Mining Institute from Tuzla can make such claims when it is well known and completely clear that the Bukovica water intake is located downstream and at a significantly lower altitude compared to the Rupica area,” notes Bašagić.

Despite this, in July 2021, the FBiH Ministry of Energy, Mining, and Industry issued Eastern Mining a permit for the underground exploitation of lead, zinc, and barite ore.

The decision to protect the Bukovica source of drinking water for the City of Kakanj has been in force for more than a decade in the Zenica-Doboj Canton and it strictly prohibits the exploitation of ore minerals in the second water protection zone.

Dalibor Ballian, a professor at the Sarajevo University Faculty of Forestry, warns of a possible ecological disaster.

“The animals are disturbed and slowly leave the area. We are losing the forest, we are losing drinking water. The wastewater from the mine flows into Vrući potok, and downstream to Trstionica… And Trstionica pollutes the surroundings of Kraljeva Sutjeska, Haljinić, all the way to Kakanj, where it flows into the Bosna River.”

 

Source: Center for Investigative Reporting

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