Regardless of whether you produce copper as a final product or non-ferrous metal concentrates, your sales depend on the international market, where you need to be competitive. There is no isolation or protection of any market, says Branko Zečević, president of the Geological & Mining Association of Serbia (GRAS)
Although mining has the prospects of making a significant contribution to GDP growth, it seems that this important industry would develop even faster if the legislature shifted closer to investors. That primarily relates to the part concerning the length and slow pace of procedures, as well as very complicated and demanding undertakings for the collecting of essential documents.
Mr Zečević, when it comes to mineral reserves, Serbia is richest in copper, lead and lignite. How important is the significant contribution of the mining sector to the country’s economic development?
– It is generally known that the majority of electricity production in Serbia is based on the utilisation of the large reserves of coal that our country possesses. This is a trend that will continue for the foreseeable future. We also have significant copper production, in which the new owners of RTB Bor – China’s Zijin Mining Group – are already investing large funds in order to increase capacity. There are also other mines producing zinc, lead, gold and silver, and Serbia’s potential in polymetallic deposits is truly impressive. One can safely say that today’s level of participation of the mining sector in the economic development of the country is below the sector’s real potential, but there is a noticeable trend of a steady increase of investments in mining, so I’m hopeful that this sector of the economy will soon assume the place that belongs to it.
It was also stated publicly recently that mining could also impact on GDP growth. Bearing this in mind, it is clear that this sector is also of great importance to the development of local communities. To what extent and in what way?
– Mining is naturally an activity that employs quite a large number of workers on each project. Apart from direct employment from local communities, there are also the positive effects that mining activities have on the wider area through subcontractors, suppliers of equipment and spare parts, and providers of various services, from transportation to hospitality and housing. Budget inflows based on concession fees and taxes are also very significant for local communities.
There is no doubt that mining can provide a significant contribution to development at the local level, and as the areas in question are mainly underdeveloped, the effect of regular cash inflows is much greater than the comparative effect that such inflows would have in more developed areas. The development of mining can reduce – and often halt entirely – outflows of populations from smaller communities towards cities.
Representatives of GRAS must work together with the Ministry of Mining and Energy on amending the law, which will lead to the simplifying and speeding up of all procedures, from the issuance of exploration rights to the issuance of exploitation permits
More than 25 foreign companies are currently participating in the exploration and exploitation of mineral reserves in Serbia. Can the mining sector be a source for creating national wealth?
– Serbia has great geological and mining potential. Mineral reserves have already been discovered in several places, which can be considered significant at a planetary level (copper, lithium, coal etc.). Given that the establishing of every new mine is preceded by years of exploration and the certification of reserves, the presence of a large number of exploration companies is encouraging. We already have several projects that are transitioniing from the exploration phase to the mine construction phase, and this will provide a significant contribution to increasing the national wealth.
An international gathering dedicated to this domain was held in Serbia recently and included discussions of foreign experiences. What are those experiences and to what extent do we apply them in Serbia? What kind of results have been achieved to date?
– I think that the companies representing the mining sector in Serbia – whether under local or foreign ownership – are very well connected and exchange information with companies abroad. That is simply the nature of this sector. Regardless of whether you produce copper as a final product or non-ferrous metal concentrates, your sales depend on the international market, where you need to be competitive.
There is no isolation or protection of any market, so you are compelled to keep pace with all the innovations in your field and to constantly invest in developing and improving production. A company that does not do this very quickly finds itself in trouble and threatened by bankruptcy. Whatever the case, room exists for improving the productivity, environmental protection and profitability of many of the companies that are active in Serbia.
What financing options for mining are possible in Serbia?
– In Serbia, for now, there are no specialised banks or funds that understand the mining sector to a sufficient extent to be effective sources of financing. Mining projects are approached like construction or any other projects, which is a mistake. Mining has its own specificities that don’t fit into classical financing patterns and difficulties arise when agreeing financing conditions for mining projects that cannot provide the same collateral as projects in other areas.
As the president of GRAS and the Metalfer Group, would you change anything in the area of the Law on Mining, which has taken a big step forward compared to the previous law. Is there a need to modernise the law and what could that change? How much could this possibly lead to an increase in foreign investments in this sector?
– The current Law on Mining is indeed much better than the previous one, but it can and should always be better. The basic problem of this law is the length and slow pace of procedures, as well as very complicated and demanding undertakings for the collecting of essential documents.
There are also overlaps between the Law on Mining and some other laws from other fields, so there are also often contradictions. I think that we, as GRAS, must work together with the Ministry of Mining and Energy on amending the law, which will lead to the simplifying and speeding up of all procedures, from the issuance of exploration rights to the issuance of exploitation permits. The actual process of exploration, certifying reserves, designing a mine, constructing mine infrastructure, investing in equipment etc. are both time consuming and exceptionally investment intensive. If you are additionally struggling with a bureaucratic apparatus and a forest of unclear regulations, your appetite for investment inevitably diminishes.