Mytilineos S.A. Group Of
Companies 5 year 1997
Contract With The Trepca Mines
Collaboration agreements signed by the Company with SASA group of FYROM and RMHK TREPCA mining group of New Yugoslavia have been the very first sizeable collaboration agreements of Mytilineos SA abroad. Nevertheless, they are bound to constitute the "model" on which the Company is relying at its present development and growth stage. Therefore, the character and the way of application of these agreements will have to be elaborated. Specifically: * Agreement with SASA group of FYROM is the commercial character and involves 86 million U.S. dollars. By virtue of this agreement, Mytilineos SA has undertaken exclusive exploitation of the group's sulphurous zinc and lead ores. Agreement is valid until the year 2004. In exchange for the right of exclusive marketing, Mytilineos SA has undertaken to finance the mine's production. * Contract with RMHK TREPCA ores group of New Yugoslavia will last five years, involves 517 million U.S. dollars and came into effect on June 1st, 1997. According to this contract, Mytilineos SA will be channeling 100.000 tons of metals per year into the market (lead and zinc).In addition, the Company undertakes financing of the group's production. This agreement forms an extension of a trade agreement to the tune of 135 milllion dollars, with the very same group, that had been signed in 1995 and had terminated on May 31, 1997.
Such agreements exceed by far the frameworks of mere trade deals. They are agreements in which the one contracting party undertakes: - Financing of the operation of mines and ores process factories, - Finding and supplying the latter with raw materials (ores) for processing by factories, - Providing them with essential mechanical equipment to modernization of production procedure, - Sharing of know-how to effective operation of the units, - Exclusive marketing of a large part of the factories' production in exchange for financial and technical assistance.
Through these contracts Mytilineos SA is rendered, in essence, a financier and co-manager of collaborating groups, although, at present stage, it doesn't participate in the companies' capital. Yet it holds aprivatization. The company is thus safeguarded against a probable buy out of its suppliers by competitors. Business deals of this type tend to prevail in the eastern European countries, as they respond better to the needs of local producers. The latter, even though they usually possess a significant production potential, are deprived of working capital and the necessary knowhow in order to function in the international competitive environment. Companies such as Mytilineos SA, that adopt a long-term collaboration policy with local producers, enjoy special treatment and revel in their exclusive marketing rights on company products.
BOR Mining Group
BOR Mining Group (RTB Bor) was founded in 1903 and is one of the main mining complexes in Europe. Today it constitutes an integrated copper and precious metals production and processing unit, while it also manufactures electric, mechanical and other devices. The group consists of a complex formation of individual companies which employ 21,000 people. It is one of the most important ecomonic units in New Yugoslavia, with an acute export orientation.
Yearly production of main metals of the Bor Complex is itermized as follows: 165,000 tons of copper metal, 30 tons of precious and rare metals, 70 tons of selenium, 800,000 tons of pyrite grading at 61% iron.
Moreover, Bor complex includes other significant metals and materials processing units, mechanical equipment assembly lines, precious metals processing and chemical products manufacturing departments.