Public Disclosure Authorized FILE COPY ANNEX TO T.O. 4a...i Kostolac Thermnal Power Plant 1 - 3 ii Vinodol Hydro Power Plant 4 - 7 iii Transformer Stations and Transmission Lines 8

RESTRICTED

ANNEX TOFILE COPY T.O. 4a

This report is restricted to use within the Bank.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

ANNEX TO TECHNICAL REPORT T.O. 4a

on the

PROJECTS INCLUDED

in the

SECOND YUGOSLAV LOAN APPLICATION

February 4, 1953

Technical Operations Department

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ANN:

TABLE OF CONiTENTS

Page Mo.I Electric Power Production and Distribution

i Kostolac Thermnal Power Plant 1 - 3

ii Vinodol Hydro Power Plant 4 - 7

iii Transformer Stations and Transmission Lines 8 - I1

II Coal Mining

Introduction 12 - 14

i Aleksinac Mine 15 - 16

ii Senjsko-Revavski Mine 17 - 18

iii Kolubara Nine 19 - 20

iv Kostolac Mine 21 - 22

v Banovici Uine 23 - 24

vi Kakanj Iviine 25 - 26

vii Zenica Mine 27 - 28

v±Ui. Kreka -ine 29 - 30

ix Coal Washery at Banovici 31 _ 33

III Non-Ferrous Metallurgy

i Strnisce Aluminum Project 34 _ 39

ii Lece Lead-Zinc-Gold Hinp LO - 3

IV Iron and Steel

i Zenica Steel Plant 4 a

ii Vares Iron Ore Project 52 r6

iii Sisak Seamless Tube Project 57 62

iv Ilijas Cast Iron Pipe Project 63 _ 66

V Utilization of Forest Resources

i Timber Production 67 .7o

ii Videm-Krsko Newsprint Plant 71 - 76

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Page Ho.VI Indus

i Electrical Equipment Industry -Svetozarevo Cable Plant 77 82

ii Chemical Industry - Sabac Fertilizer Project 82 85

iii Non-Nifetals Industry - Pancevo Gilass Plant 86 - 89

iv Agricultural Processing Industry -Zrenjanin Starch Plant 9o 93

VII M4odernization of Transportation

i Rail Transport 94 96

ii Water Transport 96

iii Air Transport 97

Map Following Page 97

I. ELMiMIC PCMER PRODUCTION AND DIS'IIBUTION

i. Kostolac Thermal Power Station

Location

The Kostolac thermal power station is located about 70 kilometersby railroad east of Belgrade on the Danube River and l kilometer from the

Kostolac lignite mines.

Description of Existing Plant

Construction of the station was started by the Germans during the

occupation of Yugoslavia, principally to supply an electrolytic copper

refining plant at the Bor copper mines. Thuree boilers designed to burn

brown coal from the Breza mines near Sarajevo were moved by the Germans

from that locality to Kostolac along with three Brown Bovari 10,500 kw

turbo-generators and other equiprment. When the Germans retreated, they

took the generators and other equipment with them leaving only the boilers

and heavy equipment. After the war the Yugoslavs located the generators:

brought them back to Iostolac and put t-he first 10,500 Imy unit into opera-

tion in 1950. The other tlfo units were put into operation in 1952. All

of the mechanical and electrical work on the generating units appeared to

be well done. As the boilers were designed to burn brown coal from Breza

which has a calorific value of 3,500 to I,000 kg/cal. (6,100 to 7,200 BIU)

they do not operate very well on the lowr grade lignite from the Yostolac

which has a calorific value of only 1,500 to 2,000 kg/cal. (2,700 to

3,600 BTU). The three boilers are able to produce steam sufficient only

for two of the thlree generating units. Therefore, while the installed

capacity of the plant at present is 31,5C0 Iarp its actual capacity is only

21,000 kw. Th- e units are 3-phase, 50-cycle and generate at 6,300 volts.

MKpansion Program

The program for the further development of.the plant will be

accomplished in two phases, The first phase will consist of increasing

the boiler capacity sufficiently to provide steam for the tlhree generat-ing units so that they can be fully utilized to produce 31,500 kw, ar.d

the second phase will consist of expanding the capacity of the plant

ultimately to 74,000 kw. The first phase of the program will be accom-

plished by installing a fourth boiler and remodelling each of the three

existing boilers to burn low grade lignite efficiently and thus increase

their steam generating capacity. For the ultimate or final installation

in the plant, four more boilers and four more generating units of 10,500 lkr

are planned. These installat.ions would bring the total capacity of the

plant to 74,000 kw, irith 8 boilers and 7 generating units.

Schedule of Construction

The rebuilding of one boiler was scheduled to be completed by the

end of 1952. Tle remodelling of the other two boilers cannot be started

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until the Spring of 1953 because of the winter demand on the plant. This

remodelling is scheduled to be completed by the end of 1953. The fourthboiler, obtained from reparations will be installed in 1953 and put into

operation in 1954. This will complete the first phase. The second phase

installations are planned for 1955-56.

Fuel Supply

Lignite from the i{ostolac mines is brought about 1 kilometer on anarrow gauge railway to the plant's primary crushers and is taken by a

belt conveyor from the crushers to the bunkers at the plant. It is thenpulverized and blown into the furnaces. The lignite contains about 45%moisture, 25% ash and has a heating value of 1,500 to 2,000 kg/cal. Themines now produce about 2,000 to 2,500 tons per day, 1,000 to 1,500 tonsof which is consumed daily in the powier plant. Production at the minesis to be increased to 4,000 - 5,000 tons per day by 1954. There will beat least a 20-year supply of lignite at the higher rate of production.Bunkers, crushing and handling equipment for the ultimate fuel consumptionof the plant (3,000 to 4,000 tons per day) have already been installed.

Water Supply

Cooling water for the plant is pumped from the Danube River. Tlecapacity of the pumps is sufficient to supply cooling water for the ulti-mate installation of 74,0coo lw.

Cost of First Phase

The rebuilding of the three boilers and the installation of thefourth boiler will cost the equivalent of $1,600,000. Of this, $R1,187,000will be for imported equipment and $413,000 for domestic equipment anderection costs. The amount of foreign exchange already finkanced at thethird quarter, 1952, was the equivalent of $1,062,000 and the amount re-quired to complete the first phase was $121,000. The latter amount isdesired from the Bank. About 60% of this amount wfould be required for thefourth boiler and the remainder for accessories for the three existingboilers.

List of Goods

The list of goods and the payments to be made thereon from theproceeds of a loan from the Bank consist of:

Goods Amount

Reconstruction of Icisting BoilersCentrifugal pumps $ 8,000Electric motors 39sooo

Fourth BoilerElectric motors 29,000Control and measuring instruments 45,000

Total 5121,C00

Labor and MIanagement

As the plant has been in operation for some time, the operatingpersonnel and management were at the plant. The number of workers employedwas reasonable and the management appeared to be competent.

Cost of Production

Fuel, although low grade, is mined cheaply from open cast mines.As the plant is practically at the mine, there are no transportationcharges on the lignite. The total cost of the fuel should, thereiore, below. With low fuel costs, reasonable labor costs, and more efficientsteam generation from the rebuilt boilers and the new boiler, the cost ofthe electric energy produced should be fairly reasonable as the full

capacity of the generating equipment could be utilized.

1Market

The energy now generated at the plant is distributed through the110,000 volt network to Belgrade, the Bor mines and to Svetozarevo andthrough the 35,000 volt network to Smederovo, Pancevo and Itaiden Pek inSerbia. The additional energy to be generated at the completion of thefirst phase will be distributed to the same area which can readily absorbit.

Justification

Industry in the vicinity of Belgrade and other parts of Serbiaserved by the transmission network is rapidly expanding and the need for

power is increasing. Industrial expansion will be severely hampered un-

less additional powTer is made available. The "ostolac plant, using acheap low grade fuel not suitable for industry, could supply a substantialpart of the demand for additional power.

January 27, 1953

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1. ELECTRIC PO'Ffl PRODUCTION AND DISTRIBUTION

ii. *Vinodol Hydroelectric Power Station

Location

The Vinodol power station is located about 28 kilometers airlinesoutheast of the port of Rijeka on the Dubracina Rivers a small streamwhich empties into the Adriatic Sea at the town of Crilkvenica. It isserved only by a road. No railroad is connected with the site.

Description

The power station has been constructed underground at the foot ofan escarpment which drops sharply from an elevation of abouit 800 metersto 50 meters above sea level within a few kilometers from the Adriatic Sea.Water for the operation of the plant is brought 13.7 kilometers throughtunnels and canals from two reservoirs on a plateau which borders thecoast. One reservoirs the Lokvep with a surface elevation of 770 meters,is located on the Lokvarka River and is connected by a tunnel 3.5 kilo-meters long to the Licanka River on which the Bajer Reservoir is located.

The surface elevation of the Bajer Reservoir is 717 meters. Wlater fromthe Bajer Reservoir is carried under pressure 4.8 kilometers in reinforced

concrete pipe and 4.2 kilometers in a tunnel to the top of the escarpmentat elevation 686 meters. From this points the water drops througlh asteel lined tunnel 1.2 kilometers long to the powqer station at elevation56 meters. The maximum head on the water wheels is about 661 meters(2,168 feet) and the minimum is 657 meters (2,156 feet). The tail water

discharges into the Dubracina River through a short canal.

The total capacity to be installed at Vinodol in the first phase

of the development will be 84,ooo kW, consisting of three 28,000 kw gener-ators powered by 6 Pelton water wdheels or turbines - or 2 wheels for eachgenerator. The whole station including transformers and switch gear forthe 10 kv and 35 kv circuits will be located underground. The switch yardfor the 110 kv circuits, however, will be located above ground.

In the second phase of the developments a second generating stationwill be constructed at the end of the tunnel between the Lokve and Bajer

Reservoirs and another will be constructed on the Kriz River with a tunnelconnecting it to the Lolve Reservoir. This will add 5.8 million cubicmeters of storage and 3,800 Iw of generating capacity to the project. Athird phase which will include another reservoir and another small gener-ating station is under study.

Drainage Area, Rainfall and Runoff

Ihe drainage area above the reservoirs is about 68 square kilo-meters (about 27 square miles), In this relatively small area, however,the rainfall averages 3.?3 meters (117 finches) annually. XThe runoff amountsto about 122 million cubic meters or about 55% of the total rainfall. About33.2 million meters or 2TVh of the runoff,can be stored in the two reservoirs.

- 5.-

Rainfall records extend over a peridd of 40 years and stream flowJ recordsover a period of 20 years.


One generating unit of 28,000 kw has already been installed atVinodol and is operating principally on water from the Bajer Reservoirwhich is completed. The second unit is scheduled to be completed by theend of 1952 and the third unit by mid-1953. The dam on the Lolcvarka isonly partially completed, but it is at a stage which will permit the par-tial filling of the Lokve Reservoir in 1953 to supply water for the secondand third units* The Lokvarlca Dam will not be finally completed until mid1954s, consequently the full energy production from the second and thirdunits will not be available until the latter part of 195. Constructionof the second phase of the project is planned to begin in 1955.

Over all the construction work on the first phase was about 88%completed and the installation of equipment was about 8O5O completed inOctober, 1952. The work remaining to be done to complete the first phaseconsists of the completion of the Lokvarka Dam, the completion of a smallamount of work on the second 28sOO0 kw generating unit and the installa-tion of the third generating unit with necessary transformers.

Estimated Eunergy Production

After completions Vinodol will be used as a base load plant in thewinter (the wet season) and a peak load plant in the summ¢r. The produc-tion from the first two jnits in 1953.is estimated at about 90 million kwh.In 19541 with 3 units in operations but with incompleted storage reservoirs,the production is expected to increase to 140 million kwh. After thecompletion of the Lokvarka Resewvoir in-1954l, which will permit fullscheduled production from all 3 generating units, the production is esti-mated.to be 263.2 million kwh in a wet year, 183.3 million kwh in anaverage year and 107.5 million kwh in a dry year.

Management and Labor

The Vinodol Powrer Station is uncer the general supervision of themanagement of the Slovenian-Croatian network. The station manager hasbeen operating the first unit since it was installed and apparently iscompetent to manage the station with the 3 units installed. The construc-tion work yet to be completed will be performed by the Yugoslav constructioncompanies which have been thus far building the project. The generatingunits will be installed under the supervision of the Swiss suppliers of theequipment*

Cost of Production

The installations included in the first phase are estimated tocost the equivalent of $238 per kw. For a project involving two reservoirsand a considerable amount of tunneling and canals, this is a very reason-able cost per kwv. On this basis power production cost would probably be

in the order of 1/2 cent per hilowatt hour in an average year. This isa. reasonable cost and probably lower than many plants now producing energyfor tile Slovenian-Croatian netiork.

Cost of the Project

The total cost of the project to thne third quarter of 1952 was theequivalent of $17.7 million. Completion of the project will require thefurther expenditure of the equivalent of appro:.z.mately $i2.3 million, ofwhich onlywr $80,000 will be for imports. The table below shows a breakdownof the costs:

Cost Expressed in Thousands of U.S. DollarsConstruction Equipment

Period WIork Imported Domestic Installation -Total

Third Quarter01952 14,l00 3,138 177 300 17,715To complete 1,900 80 256 70 2,306

Total 16,000 3,218 433 370 20,021

The $80,000 remaining to be paid on imports is desired from the Bank.

List of Goods

The equipment which the Bank has been requested to assist in finan-cing has been on order in Switzerland for some tinme and only a small amountremains to be paid. The items and the payments to be made thereon are:

type of Equipment Amount

Transformers $31,650Generator (3rd unit) 48,350

Total $580,000

iIarket

Ihe plant is already connected into the UO0,000 volt Slo-rnnian-

Croatian netwiork which serves tle highly industrialized northeas:,ern partof Yugoslavia in which the demand for electricity is rapidly ir.Crea.sir,g.The production from Vinodol can be readily absorbed in the networ':.

Justification

The justification of this project rests primarily on the fact thatit can be used, in effect, to Afirm up the power from other hydro stationsin the SlovenianvCroatian network. The drainage area of Vinodol lies inthe Mlediterranean Basin 2nd its high water season is in the winter time

whereas the drainage areas of the other hydro stations (principally on the

Drava River) in the network are in the Alps and have their low water sea-son in the wJinter. This inversion of seasons in the same network is mostunusual and is important because it increases the firm or assured amount

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of hydro power available in the network, and obviates the necessity for alarge amount of standby thermal capacity. This station will contributesubstantially to the large power requirements of the Strnisce Alumninumproject in Slovenia which the Bank has been requested to assist in fi-nancing.

January 27, 1953

- 8 -

. I. ELECTRIC FOWER PRODUCTIONT ATT) DISTRIBUTION

iii. Transmission Iines and Transformer Stations

Description of Pro;ject

The transmission lines and transformer stations which the Bank hasbeen requested to assist in financing are all under construction. Equip-ment from abroad is required for the completion of 1,290 kilometers oftransmission lines, 27 primary and 58 small secondary transformer stationslocated in various parts of the country. The total foreign exchange cost

of the project is estimated at the equivalent of $9,482,000, of which$7,576,000 has already been financed. Of the remainder, $1,906,000, theequivalent of $576,000 wrill be financed from the German loan and $1,330,000is desired from the Bank. Of this amount, $193,000 would be for transmissionlines and $1,137,000 would be for transformer stations. Mlore detailed infor-mation concerning the transmission lines and transformer stations follows.

Transmission Lines

Yugoslavia can supply most of the copper and alumainum conductors and

most of the materials and equipment reouired for the construction of itshigh tension transmission lines including the towers from domestic produc-tion, but it must import high tension insulators and other accessories and

some special types of conductors. These constitute a relatively smallproportion of the total cost of the transmission lines. The loan requestfor transmission lines covers such equipment.

The high tension transmission lines under construction as at the endof October, 1952, for which equipment is being imported, consisted of 730

kilometers of 110,000 volt lines and 560 kilometers of 35,000 volt lines.These lines will supplement and extend the 9,023 kilometers of high tensionlines already in existence on that date. About 57% of the existing lines

(5,100 kilometers) have been constructed since 1945. All of the new mainlines have been 110,000 volt or 35,000 volt lines and all future main lineswill be of these voltages, although lines of 132,000, 80,000, 60,000, 5Q,000and 20,000 volts are in use. The kilometers of lines in use and under con-

struction in each of the six republics are given in the following table:

Kilometers of Transmission Lines

Republic In Operation _ Total Unaer Construction Total110kv 35kr Other 110kv Ma351v

Serbia 514 2,100 - 125 2,739 340 150 490

Croatia 400. 1,070 - 335 1,805 120 100 220

Slovenia 566 2,035 - 212 2,813 - 55 55

Bosnia & Herz. 226 670 - 896 243 105 348Macedonia 40 500 - 540 27 100 127Miontenegro 230 _ 230 - 50 50

Totals 1,746* 6,605 672 9,023 730 560 1,290

I-ilometers of thep--n l-nes are temporarilyr o;nc orrw -r _L 'rA

_.9._

There are five separate, uncornected network's of transmission lines

in Yugoslavia serving five regions of the country. The lines were con-

structed without regard to the boundaries of the Republics and in two

instances the networks serve parts of tWo Republics. In Serbia, Macedonia

and Montenegro the networks do not extend beyond the borders of the

Republics, The two networks which serve parts of two Republics are the

Slovenian-Croatian and the Bosnian-Dalmatian (see map).

All of the lines now under construction are scheduled to be completed

by the end of 1953. The 110,000 volt lines now being temporarily operated at

60 and 35,000 volts will be stepped up to full voltage as soon as the sub-

station equipment required is installed.

Cost of Transmission Lines

The total cost of the 1,290 kilometers of transmission lines under

construction will be about the equivalent of 36,000,000. Of this amount

$661,000 will be in foreign exchange and the remainder in domestic currency.

The Bank has been requested to finance 3196,000 of the foreign exchange

costs.

List of Goods for Transmission Lines

The goods to be financed with the proceeds of an IBRD loan would

consist of:

Insulators and Accessories i134,000Steel rope 32,000Covered conductors 30.000

Total $196,000

All of the equipment is under contract and will be imported from France, the

United Kingdom and Austria.

Justification

Expansion of power facilities, of which this is a part, is necessary

for the general programa of industrial development now in progress-in

Yugoslavia. The completion of the 1,290 kilometers of high tension lines

will assure a better supply of electricity for existing consumers and

provide power for,new tndustries now under construction throughout the

country,

transformer Stations

In the first loan to Yugoslavria the equivalent of $3,000,000 was

allocate-l for the purchase of equipment for 19 transformer stations. The

domestic currency costs wrere estimated at $3,247,000. To the end of

October, 1952, $954,833 of IBRD funds and the equivalent of '$1,589,000

in domestic curreney had been expended on the stations, Fourteen of the

stations are scheduled for completion in 1953 and the remaining 5 are to

be completed before the end of the second quarter in 1954. These dates

of completion are somewhat later than the dates originally given to the1-.. .

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Under the current loan request the Bank has been requested toprovide funds for additional equipment for each of the 19 transformer

stations included in the first loan, for certain equipment for 8 newprimary transformer stations and for 58 small secondary stations notcovered by the first loan. The name, location, the amount of financingunder the first loan and the current loan request for each of the 19 trans-former stations are showxn in the table below, together with the amounts offinancing desired for the 8 new stations and the 58 secondary stations.

19 Primary Transformer Stations Previously FinancedAllocation under

Station Location 1st Loan 2nd Loan Request

Belgrade Serbia 321,400 52,400IKosovo " 107,200 67,700

Nis 156,800 5,200Novi Sad 76,700 12,700

Lozovac Croatia 134,500 :9 ,700Rijeka (1Iatulje) " 33,400 34,000

Zagreb " 234,000 82,600

Split " 165,200 167,300Tito n 190,000 134,400Varazain " 119,000 43,800LJubljana Slovenia 190,000 77,000Marifor !I 330,000 90,000Mostar Bosnia & Herzegovina 183,000 16,400Sarajevo " 163,700 40,000Jajee" 100,200 105,300

LuIsavac " 90,700 40,600Zenica 217,600 32,600Gorazde 73,800 17,000Skoplje Macedonia 112.800 60.000

Totals 3,000,000 1,111,700

8 New Primary Transformer Stations

Vlaljevo Serbia 15,000Petrovac 14,700Svetozarevo 15,300Bor " 6,000Rankovicevo 4,700Dugarat Croatia 108,500Radojica Slovenia 77,000Celje (1aslco) " 73.700

Total 314,900

58 Secondary Transformer Stations

4 Stations - Serbia 28,30037 Stations - Croatia 214,400

3 Stations - Slovenia 16,0007 Stations - Bos & Herz 40,3007 Stations - Montenegro _24.600

58 323,600

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The amounts currently requested for the transformer stationsfinanced under the first loan are required because: a) transformersoriginally planned to come from domestic production now cannot bedelivered in time for the scheduled completion of a number of stations;b) new demands for lines to serve new indus;ries or loads have developedsince the original estimates of equipment for the stations were made, andc) the original plans provided only the minimum equirment to be installedin the stations and in some instances only for the provisional operationof the stations. The additional funds requested will provide equipment forthe full operation of the 19 stations and permit them to supply all currentdemands, and will provide equipment for the 8 new primary and 58 secondarystations not financed under the first loan.

Cost of the Transformer Stations

The total cost of the transformer stations under consideration(including the 19 covered in the first loan) is estimated at the equivalentof $13,500,000. Of this, $8,821,000 is estimated to be in foreign exchangeand $4,679,000 in domestic currency. Foreign exchange costs of $7,108,000have already been financed. The Bank has been requested to finance$1,137,000 of the remaining foreign exchange costs and $576,000 will becovered by the German loan.

I,st of Goods

The goods to be financed with the proceeds of a Bank loan and thepayments to be made thereQn are:

Goods Amounts

Transformers $ 151,000Circuit Breakers 85,000Cables, armored 289,000Switchgear 522,000Control Instruments 90.000

Total $1,137,000

The equipment, which is all under contract, will be imported from France,Italy, Germany and Austria.

Justification

The transformer stations are a necessary link in the transmissionand distribution of electricity from generating plants to ultimate consumers.The stations under consideration are geared to the industrial expansion pro.gram and are necessary to keep the power program in pace with the industrialprogram.

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II. COAL MUIIHG - 140DERUNIZATIO1T A"LD M-AITSION

The project for the modernization of coal mines for which the Bankhas been requested to orovide, the equivalent ofl$3i,890,000 in foreignexchcvnge, will consist of the installation of; a) modern mining and trans-port equiPment in 8 mines, both underground' nd open cast; and- b) a wash-ery at one brown coal mine. This 'roject is part of a large scale coalmodernization program which has been under wey st-ce 1947. In 1951, aprevious Bank loan included a project for coal-mining modernization forwhich about $8 million was made available out of a total loan of $28

million.

As part of the Key Projects Program, a project has been drawn up andis in the course of execution, designed to raise total coal producing capa-city to 20.2 million tons per year by 1955. The effort is confined almostentirely to 12 large mines which are slated to have an annual capacity of14 million tons. Tonns.ges produced in recent years as compared with pro-jected 1955 capacity (thousands of tons) are:

Mines 1948 1949 15 1951 capacity

Bituminous 1 544 825 784 667 860Brown coal 7 3,273 3,403 3,711 3,786 6,040Lignite 4 2.31 2.?40 3.007 2.815 7,100

Key Mfines 12 6,130 6,968 7,502 7,268 14,000All others 4, 59 5139 5.2 6 4.774 6Ž2oo

Grand total 10,724 12,107 12,866 12,042 20,200

The total estimated foreign exchange cost for corrmoletion of the coal

mining modernization program under the Key Projects Program, is $20.7 mil-lion, An adaitional $2 milllon will be required for a new coal washeryproject described belowi. The first I3RD loan allocated $7,990,000,equiv-alent to 8 mines. The present proposal includes $1,890,000 for 8 mines(four of which were lnot covered earlier). If the proposal is executed, the

total foreign exchange requirements for the coal portion of the Key Pro-jects Program will be assured excent for$222,000 for 4 mines (Breza 126,

Rosa 82, Velenje 10, and Zagorje 6). The remainder of $10.6 million was

made available from other sources, inclt-.ding credits fromn the Exoort-ImoortBank and payments from Yugoslaviats otl:n exchange resonrces.

The amounts involved are so small as to indicate that the necessarypayments can be net from Yugoslaviats own resources. In the case of Breza,delays in delivery of transport equinment which may occur are not believedcritical, since mining capacity w?ould in any event greatly exceed washerycapaXcity. For this reason, it was felt that priority should be given toexpenditures for other mines where present washery cap.city appears adequate.

lfhile total capacity is to reach 20.? million tons, Yugoslav authori-ties do niot envisage a production need exceeding 18 million tons, by 1955.

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Excess capacity is however renuired as a ressrve against seasonal laborshortages (in the summer), high seasonal demands (in the winter) equip-ment breakdowns and other contingencies. It was the lack of such reservecapacity in recent years which is said. to have been responsible for situ-ations where forced production at the expense of inadequate maintenanceand development caused later reductions in output in some mines in 1950and in most mines in 1951.

Yugoslav authorities furnished estime.tes of coal demand for 1950,1951 and 1955 as follows (in millions of tons):

19551951 Yugoslav Estimate

Industry and ?ower 7.20 6.68 10.92Defense Plants 0-35 0.32 0.40Transport 3.45 3.42 3.70Domestic use 1.15 1.12 2.20Erports 0.13 0.25 0.75Others (including stocks) 0.59 0., _.

12.£7 12.04 17.97

After detailed discussions, Yugoslav exoerts conceded that largelybecause of revisions in the Key Projects Program industrial demandscould be reduced by at least 500,000 tons per year. In view of only thelimited likelihood that exports would reach 750,000 tons and the probabilitythat household consumption would not likely double in four years, staff es-timates are that a oroduction of about 16.5 million tons would be adequatein 1955. Offsetting this reduction in demand is the fact that productionat mines other than the 12 key mines may fall further since little or noinvestment is likely to be made in these mines. On that Dremise, 1`55 pro-duction mey be estimated as follows:

000 Tons % of Capacity

1 Bituminous Coal 750 877 3rown Coal 5,100 854 Lignite 6.ooo _8S

11,850 85All others 4.650 75

16,500 82%>

In any particular year from 1955 on, production could be raisedcloser to capacity if required either for e mort or internal consumption.After thi.s expansion in capacity is carried out in the larger mines, itis anticipated that production at some of the smaller and oldr-r mines willbe curtailed or cease altogether, while others like the Kosovo open pitmine in Serbia near the Macedonian border may be expanded, if market condi-tions warrant.

A major -aurpose of the cepacity expansion program is to reduce man-

power requirements. As compared with employment of 53,400 in !-lay 1952,that toal manpower requirements for capec-ity operatioiis in 1955 would be

3,000 lower due to substantial increases in out:out ner marn shift, especial-ly at underground mines lacking modern mechanical equipment, has been es-recially difficult in years of good harvests, the mechanlzE.tion orogram an-Dears essential. In fact, there is good. reason to believe that in theabsence of such mechanization, a shorta:.e of coal mighlt prove a majorbottleneck in the Yugoslav economy, thereby endanngering -rospects for sec-uring bealance of payments equilibrium.

Moreover, the expansion of open-cast lignite output in Serbia (Kolu-

bara and Kostolac) will have the effect of reducing long railroad hauls oflow value lignite from Bosnia (Kreka. mine). This displaced lignite is ex-pected to be used incre-.sin.gly for coke oroduction at Lukavac and Zenica,affording significant import savings and important trans-port economies.Croatia or Slovenia, w1hich apDear to lack adequate coal reserves relativeto coal consumption, *oresent or anticioated may become incre-singly imcort-ant markets for Bosnian lignite and brown coal.

In addition, provision is made for $2 millions (equivalent) in foreign

exchange for construction of a washery at the Banovici brown coal mine. Thismine, visited by a staff member, is tne largest coal producer in Yugoslavia.Most of the coal mined is from open-pits by drag lines, slhovels and power

loaders; its oroductivity is the hiGhest and its unit costs the lowest inYugoslavia. 'then visited, large quantities of run-of-the mine coal were

lying unsold along the railway line, bec4use its quality in an unw,zashed

and unscreened state rendered it unsaleable except at sizeable price re-ductions. The existing screening plant has only a 4,000 ton per day capa-city (1.2 million tons oer year) as comnared with current and projectedoutput of 1.4 and 1.9 million tons per year.

The existing screening plant merely provides a means for sorting outlarge isolated oieces of wood, stone and other waste. A washery, 2s indic-ated in more detail in the washery project anz:.lysis, produces two market-v:ble products with 89% of the mined volume, elininc..ting 11% by weight andonly 1l-+, of the estimated heating value. The main bulk of the marketablecoal is ha;uled long distances (over 300 kilometers to Belgrade and EasternSerbia, and even farther to the Austrian bord.er for e:-.:port). Washing byraising the heating value peer ton sold and reducing the volume of waste mat-

ter (largely ash) hauled long distances, s'nould benefit the internal Yugo-slav economy and improve its cornmetitive oosition in exiort markets. Attach-ing the washery to the largest, lowest-cost mine with a diversity of coalseams, aD?eared more desirable than an altern.ative site (Breza) under con-sideration. At the latter, less assurance of adequate sup.olies existed be-cause the mining was from undoerground workings of more limited ca:...cityreouiring c. larger working force and inv-olving higher real costs. Thrther-more, the 3anovici mine appeared to offer greater promise for future ex.an-sion, if required. mhe other coa.l.mines being financed appear to haveF.ufficient coal treatment capacity installed or under construction (Kakanj,

Kolubara) relative to requirements.

A detailed description of the coal mines and the washery to be financ-

ed, follows.

- 15-

II. COAL MI"TYIG

i. Aleksinac

Location:- In eastern Serbia north of Nis. The mines are located on the

main railway line, Belgrade-Nis-Skop1je.

Type of Coal:- Brown coal.

Reserves:- ADoroximately 25 million tons.

Analysis:- Moisture 17 - 23%; Sulphur 4.2 - Lk-5%; Ash 14 - 19%; heating

value, 4,270 calories Der kilogram (7,686 BTTJ per pound).

Production A c t ua 1 s t i m a t e d1948 ' 1949 ' 1950 1951 1 1952 1953 195K

'ca-acity(l,000 M tons) 291' 251 ' 273 2 66 t 280' 20' 480

Marlkets:- Serbia is a deficit coal area and it needs in excess of the pro-

duction from Aleksinac and SenjskD Resavski are suiilied by long-haul railtrans;ort from Bosnian coal f4elds. Main present customers are rail2vaysand the Bor mines. Newi; refractory plants nearin" completion will provideadditional markets, but displacement of Bosnian coal is also likely.

Labor:- M!d-1952 mine employment 1las 2,400 and is exrected to decline to

2,050 by 1955.

Power:- Pow.er is obtained from Aleksinac thermal povwer plant, whose capacity

is adequate to meet probable increase 'n consurotion.

Improvements to be Undertaken:- New shafts now being sunk to concentratehoisting operations. Nei. mine conveyors and battery locomotives to speedup mine transport. Present washing capacity adequate to treat expectedincrease in output.

Investments to Date and Foreign Exchange Requirements:-

Expressed in 000 Dollars Equivalent.

Foreign ExchangePannents made Requested

To June 30, 1252 Required to Complete after June 30,152 from I3RD

Localcurrency 4,998 2,002 -

Foreignexchange 366 180 5 175

- 16 _

List of Goods to be Purchased with Proceeds of IBRD Loan:-

Amounts$tems 0oo0 U.S.)

- ripes and Accessories 30- Seamless pipes 24- Conveyors and parts 8- Two conveyors 6- Electric motors 13- I'SCH' sets 2- Electric motors 7- Pneumatic Hammers and Parts 7, Mine conveyors 49- Battery locomotive

Total 175

Tlese goods have alreaedy been contracted for in France, Germany,and the United Kingdom.

Justification: While output per man shift is relatively low, the Serbianmines enjoy a transport advantage, nearness to market. Exoansion ofSerbian mines frees Bosnian coal for use in Bosnian industrial exoansionand for shipment west to Slovenian and Croatian deficit areas. Expan-sion of production will enable fuller use of existing washery, facilitiesfor which are not adequate in Bosnia. Assists in raising foreign exchangeearni,ngs from copper and refractory exports.

- 17 -

Ii. SenJsko Resavski

Location:- In Eastern Serbia, near Cuprija north of ITis and Aleksinac.

The mines are connected by narrow gauge line to the main Gelgrade-

Nis-Skoplje railway.

Type of coal:- Brown coal.

Reserves:- Approximately 15 million tons.

AAnalysis:- Moisture 21 - 225%; Sulphur 1%; Ash 15 - 20C; heating value

.3,700 calories per kilogram (6,660 BTU' per pound).

Production A c t u a 1 E s t i m a t e d1248 1 1949 ' 1950 ' 1951 t 1952 ' 1953 ' 1955

(1,000 lI tons) 377 ' 347 ' 387 318 ' 330 ' 360 520I t , I I

Markets:- Similar to Aleksiiiac, but lower sulphur content as mined elim-

inates need for washing; dry screening is practised.

Labor;- Employment mid-1952, 2,618, but is expected to declilne to 1,820.

Power:- Power is suplied from a thermal plant at the mines and another

in Cuprija, both interconnected wiith other Serbian power plants.

Improvements to be undertaken:- A new pit is being oopened by means of

an adit, requiring drilling equipment, conveyors and other transport

equipment and rel&ted equipment, Efficiency will be greater at new pit

because of more modern equipment and elimination of hoisting requirements.

Investments to Date and Foreign Exchange Requirements:-

Zxoressed in 000 Dollars Equivalent

Foreign ExchangePayments made Requested

To June 30, 1952 Required to comilete after June 30,1952 from IBRD

Localcurrency 4,115 1,536 _ _

Foreignexchange 462 283 100 183

- 18 _

List of Goods to be Purchased w'ith Proceeds of IBRD Loan:-

Amc rn tsItems ($000 U.S.)

- Electric mine drills 29- Winches 2- Conveyors 38- Electrical equi3ment for conveyors 11- Spare parts for drills 13- Spare parts for drills 17- Stationary compressor 21- Seamless tubes 30- Battery locomotive 22

Total 183

Justification: See Aleksinac.

- 19 -

iii. Kolubara

Location:- The coal fields are located aoout 30 miles southwest of 3el-

grade. The-y are situated south of the Sava River and on both sides of the

Rolubara River. Underground pits now in oper.: tion are now connected by the

narrow gauge lines Arandjelovac-Lajkovac-Belgrade. An adc6itional connec-

tion is olanned from the new open-cut sites to the railroad line Sabac-

Obrenovac-Kolubara.

TXme -if operation:- Present mining is largely unCerground, but open cast

mining on a small scale started in the summer of 1952. When the excavating

equipment is delivered and assembled, overburden removal can be accelerated

in preparation for solely open cast mining. The older underground pits will

be abandoned gradually.

Reserves:- Reserves are estImated at 1,000,000,000 tons, of which about

250,000,000 are suitable for open-cut oneration. 0pen cast mining for the

next decade will be concentrated largely on Field A (4 million tons) and

Field B (21 million tons).

Analysis:- The coal is liniite, of the following average comoosition; total

moisture, 50 to 54%; total sulphur, .26 to .75'%; ash, 5 to 145; heating val-

ue, 2,146 to 2,606 calories per kg (3,863 to 4,691 3TU per pound). Proces-

sing in the drying olant financed by the first I3RD loand will reduce mois-

ture content to 18%' or less, raise ash to 9 - 12p with a kg. caloric content

of 3,350 - 4,000 depending on the degree of dry,ing.

Production:- A c t u a 1 s t I m a t e d

19L48 T94 9 1950 1951 1952' 1953 1955capacity

(1,000 M tons) 385 430 474 424 450 700 2,400

Market:- The undried fines wtould be used at ne. rby pow.er clants, while

the dried lignite would be used for transoort industrial and household

consumption. Among the likely industrial users are the new Sevojna brass

plant, the glass plant at Paracin (financed by thn first ITRD loan), and

several ceramics plants. Large shipments of lignite now mede from the

Kreka mine near Tuzla, 3osnia cotld be eliminated.

Labor;- Present employment including those engaged in preparatory work

for open cast mining exceeds 1,500. Capacity production in 1955 (over

five times Dresent output) would require no net addition to the labor

force, although different skllls will be required.has

Power:- HTearby power plant (Vreoce)/adequate capacity to meet needs, in view

of interconnections Aith other Serbian nower plants.

Improvements under way:- Preparation of open pits for large scale mining

with bucket wheel dredges and the use of drag lines for coal extraction

are contemolated. Some of the equi-oment had heen delivered in the summer

of 1952, when a staff member visited the mine, but all had not yet been

comoletely assembled. Most of the necessary equipment was arranged for

20

under the first IBRD loan. The supplemental amounts under the presentproposal are for additional transportation equipment.

Tnvestments to Date and Foreignr. 3xchange Requirements:-

Exoressed in 000 Dolle.rs Equivalent.


To June 30,1952 Required to Complete e.fter June 30,1°52 from I3RD

Localcurrency 6,094 5,265 - -

Foreignexchange 5,168 563 201 367

List of Goods to be PurchaseC; with Proceeds of IBRD Loan;-

AmountsItems ($000 U.S.)

- Tracls and Track Accessories 156

- Steam Locomotives and Cars 209- Cutters 25- Tractors and Parts q

- Gross 393

Less Payments Unallocated 26

i-et total 3,67

These goods have alre.ady been contracted for in France and Germany.

Justifications:- The dried lignite product will displace Bosnian lignite

and brown coal, now hauled 300 'kilometers or more to Belgrade and other

Serbian destinrtions. Its delivered cost in central Serbia will be perhaps

$6 psr ton or at least 25% less than the cost for equivalenrt heating value

in Bosnian brown'coal or lignite.

- 21 -

iv. Kostolac

Location:- In Serbia, 70 kilomaters east of Belgrade on the south bankof the Danube. Shioments to Belgrr.de and other areas are mabnl:: b water,but the mine is also situated on1 the Belgrade-?ozarevac railway line.

T;,e of oneration:- Lignite coal mined by open -pit and uncderground methocs.

Reserves:- 150 million tons in open cuts anc a few- million tons in under-ground mirnes.

Analysis:- Low grade uiwashed lignite used mainly for thermc.l power stat-ions, cont-ains about 50% moisture, 10/

- 22 -

List of Goods to be Purchased with Proc--eds of IBRD Loan:-

Amounts

Items ($000 U.S.)

- Steam Locomotives and lJagons 521

- Track Accessories 30

- Shovels parts 27

_ Gross 578

- Unallocated Payments 15

--iet total 563

been.These goods have alr2ady/contracted for in France and Germany.

Justification:- These exranded open pit mines will increase production,

and reduce manipower requirements resulting in cheaper coal for major Dower

stations in Belgrade and the vicinity east of it, As in the case of

Kolubara, its outpUt will, in part, displace low grade Bosnian coal hauled

over 300 km at high cost to the national economy.

_. 23 -

v. Banovici

Location:- The Tito-Banovici brown coal field is about 30 km southwestof Tuzla, 3osnia. They are connected by narrol-gauge railway with acoal separation plant at Litva, and are also connected through the stEnd-ard gauge line Vinkovei-Broko-Zivinice-Litva to the main Belgrade-Zagrebline.

T:e of 0peration:- At present four ooen cast and two underground minesare ooere.ted. A new! underground mine is being opened and several newopen pit workings are bein- prepared for mining.

Reserves:- Total reserves at thi.s f4eld are estimeted at 300,000,000metric tons, of which about 80,z are suitable for ooen-cut mining.

Production: -A a t u a 1 E s t i m a t e d

1948 l1949 1950 191 1952 1953 1955capacity

(ooo M tons) 801 850 1,033 1,318 1,450 1,600 1,,900

Analysis;- See Banovici washery project.

power:- Electric power is obtained from the Bosnian grid, supolemented bya standby Diesel unit of 600 kw: capacity. A 2,500 lnk st tion at Banoviciwas completed in 1952.

Markets:- Coal is shipoed eastward to SerbiE L.nd. westward to Croatia andSlovenia, and for exnort to Austria and Wesstern Germany. Stocks of run-of-mine coal were accumulating, siince mining cepacity exceeded-screeningcapacity at existing facilities. For this reason a washing project to im-prove coal cwuantity is Droposed.

Labor:- Local labor force i;cluOing shops and tra.nsport is about 3,300, ofwhich about 2,200 are engpged in mining 1'roper. Total lebor force is notexpected to clhange greatly. Outout per worker is the highest in Yugoslavianmines, because of the excellence of the seams and the large proportion ofopen-cast production to tote;l out-ut.

Improvements Under Way:- This mine wa:s visited by a staff member in thesummer of 1952. Tne open cast equ5pment appeared efficiently ran and itwas evident that as additional equi.om3nt, financed both by Export-ImsortBank and. the I3RD loans arrived, production could be further expanded. Theshovels to be fine.rced are essential to increased output. As noted abovescreening cap city is inaclequate to trsat the full mine output, resultingin accumulations of unscreened coal, unsaleable excent at lower prices.

- 24 -

Investments to Date and Foreign Excha:nge Requirements:-Eypressed in 000 Dollars Equivalent.

Foreign ExchangePayments made requested

To June 30, 1952 Reauired to Complete after June 30,1952 from IBRD



Requirements for the washery are shown separately elsewhere.

List of Goods to be Purchased with Proceeds of IBRD Loan:-

Amounts

Items ($0O0 U.S.)

- Electric Shovels 324- Drills 14- Rubber cables 12

- Seamless tubes 28378

Less Unallocated Payments 24

Total 354

The goods listed above have been contracted for in U.S.A., U.K., France,Belg,ium and Western Germany.

Justification:- This is the largest, lowest cost coal mine in Yugoslaviaand 4s very efficiently operated. It is counted uoon as a major supolierfor the exoort trade. The new equiptent should further reduce real costs.As indicated abo-ve, a washery oroject at the mine to imnrove quality andreduce trans6ort costs involved in shipments to domestic and foreign mark-ets would further Imorove its comoetitive ;,osition and greatly benefit the

Yugoslav economy'

- 25

vi. Kakanj

Location:- The Xakanj mine is ppart of the Central Bosniar- brown coalfield, located in the Bosna River Valley, extending in a southeast oir-ectio;i from Zenica to Sar&jevo. T'he coalfield, largest of its kind inYugoslavia, occupies an area of 900 sq.uare kilometers. The Sarajevo-Vrpolje line, which conrects with the Belgrade-Zagreb-Ljubljana raillwayline, passes throu;gh 3osna Valley, e.nd connects with the three mines nowbeing vorked - Breza, Kaisanj and Zenica.

Tyve of Operation:- Mining is carried on at four underground poits.

Reserves:- Over 200 million tons of brown coal.

Production A c-t u a 1 E s t i m-a t e d1948 194a9 1950 1951 1952 1953 1955

caac i ty

(1,000 N tons) 512 568 636 611 640 700 1,150

Analysis:- Raw co&l as mined contains 27% ash, lO, moisture, and 1.65%sulphur; heating value 4,450 calories oer kilogran (8,010 BTU per pound).Present washery reduced sulThur below l.5>, moisture to 8 - 9c and ashbelow 25% on the average, and rai'ses heating value about 81%6. iNew we.shery(2,400 tons per day) will make further improvement possible.

Pover:- Obtained from Bosnian grid, largely from the Zeneca thermal station.

Markets:- 56% of the coal sales are to destin-ti.ons 1ithin 200 kilometersof the mine. This rmine will supp,ly brown coal ,'or the colleries at Lukavacand Zenica.

Imnrovements under way:- lNew shafts hcve been sun': end work, is under wayconnectiing t'hese shafts with working galleries to reduce -resent longunderground haulage by concentrL tinv hoisting at fewer lhafts, betterlocated for future m4ning o,oerations. Washery und3r construction alsobetter located and will have ample capacity,

Investments to Date and Foreign Exchange Requirements:-Zx:ressed in 000 Dollars Equivalent

Subsequent RequiredTo June -0, 1952 Required. to Comn,lete ?ryments from IBRD



_ 26 -

List of Goods to be Purchased wjith Proceeds of IBRD Loa.i:-

AmountsItems ($OOC U.S.)

_ Sea.mless tubes 35_ Miscelle.neous items 28

63

Justification:-The expe.nsion of brov-n coal out'wut at Kakan;, producingthe best type of such coal for coking purposes, is necessary to assist inmaking possible substantiU.l im.nort savings on coke. Nevi wEishery will fur-ther imorove quiality and perm.t larger tonnage to be mined and sold.

^ 27 O

vii. Zenic,

Location:- Part of the Central Bosniar brovn co..l field (see XakanJ).

Ty-Oe of Oneration:- Underground. mining by 4 shafts.

Reserves:- 75 million tons

rroduction

A c t u a 1 :4 a t i m, a t e d194 8 - 1949 1950 1951 1952 1°53 1955

ca-oacity

(O0O .-I tons) 394 404 432 399 420 440 56a

Analysis:- Raw coal contains 14% moisture, 28% ash and 3,5% sulohur; heat-ing value 3,770 calories per kilogram (or 6,680 3TU per pound). Screeningand washiing at the mine reduces ash below 20% and raises heE.ting value 10-

15%. Fines with higher ash content are used at adjacent thermal po.rer

plant.

Power:- ?o*:er is sup;:lied. by adjz;.cent therm-.l ooter plant interconnectedwith Bosnian grid.

Markets:- 85 - 90% of coal is sold to thermal mower pl- nt,Zenica steel wior;zs,and railroads with minimum haulage.

ImTprovements Under Wa-;:- New shafts have been sun!c severcl miles away toafford better access to remnining coal reserves, to re.,l..ce ex.mected declinein output from nresent shafts, with only sllall net ex,..nsion in outout ex-:pected. -resent mashery ca:oacity amole to treat anticim&ated capacity out-put.

Investme..nets to Date and Foreign Exchange Requ;.rements:-Exzressed in 0oo D ollar Equivalent


To June 30, 1952 Required to Comnlete after June 30, 1P52 from IBMDLocalCurrency 4,415 1,583ForeignExchange 530 122 34 88

List of Goods to be Purchased with Proceeds of I3P.) Loan;Amounts

Items l.•Doo U.S.)

- Conveyors 10E Electric Locomotive 17

- Seamless tubes _Gross 94Less payments unallocated 6

,T_, 4. ^+ 8 -

- 28 -

iJustification:- This m4.ne hac ample weshing caoacity to treat a largeroutput, which is to be ach..eved bay comoleting new, more accessibleshafts. Bulk ofI output sold to consumers :wiithin 10 kilometers of mines,minimizing transport requirements.

- 29 -

viii. Kreka

Location:- The Kreka coal field. is in northern 3ornia near Tuzla. It ex-tenids westvtard alon-g, the Spreca River from Zvorniik to Gracanica for adistance of 55 kilometers, and has a total area of 255 square km. Thefield is connected with the narrow-gau.ge Tuzlz-Doboj line, and v?ith thestandard-gauge line Breko-Banovici, which in turn connects vwith the Bel-grade-Zagreb line.

Type of Operat.2on:- Underground mining at numerous shafts, both inclinedand vertical. Ne-j pits are being opened to minimize underground haulagewhich is not mechanized.

Reserves:- Total reserves in the field are estimated at four thousandmillioni tons, of which two thousand million tons are in the area 1where thepresent pits are locatedi.

Analysis:- The comnosition of the Kreka lignite is: moisture 30-351:;sulphur 0.5 - 0.Z; ash 8 - 20%; heating value 2,200 - t,300 caloriesper kg (or 3,960 - 5,940 BTU per pound).

ProductionA c t u a 1 E s t i m a t e d

1948 1949 1950 1951 1952 1953 195

(000 I. tons) 870 1,157 1,291 1,184 1,400 1,550 2,150

Labof:- Mid-l952 emnloyment 5,507, of whom 700 were em)loyed in auxiliaryoccupations, e.g. washcry, shops, etc. Mine emoloyment is exoected todecline by about one-third when underground transport is fully mechanized.

Power:- ?oller is obtained from the Kre'ka and Banovici poower stations.

NWrkets;- 'hile considerable quantities are sold to chemical plants nearby(Lukavac soda ash and i(rek.ca salt), large quantities h;ve been shioped toSerbia anc'. the Voyvodina. This wasteful haul will be reduced when Kolubaraand Kostalac n-nes exoand outout. Increased demand for Kreka lignite isanticioated from L-ukavacs (soda, ash expansion) and the Lukavac and Zenicacokeries which ere much closer at hand.

Imorovements Under "lay:- Hoisting operations conclucted at &ppiroximately20 points are to be coancentrated at a smaller number of points. Under-ground trmns?ort is being rechanized by use of conveyors to main haulageways, where electric locomotives will carry coal to hoists. Much of thisequipment has been ordered and committed previously. Very extensive localexpenditures for surface works to handle this concentrated tonnagse wereevident to a staff mern,bsr who visited the mine. Reductions in la-oor require-ments should be considerable.

l 30 -

Investments to Date and Foreign Exchange Requirements:-Expressed in 000 Dollars Equivalent

Foreign ExchangePayments made Reqcuestedo

To June 30. 1952Reaulred to Complete after June 90, 1,52 from IBBID

LocalCurrency 15,268 5,973 - -

ForeignExchahge 1,498 152 55 97

List of Goods to be Purchased with' Proceeds of I3RD loan;-

Amounts

Items ($000 U.S.)

- Locomotives 314

- Seamless tubes 63

Total 97

Justificatioa:- This mining area reoresents a major source of coal res-

erves, whose opprztion can be greatly expanded and costs (especially labor

r,quirements) conisidercbly reduced by mechanization of underground transnort.

Substantial exoenditures have alr-ady been made or committed both in foreign

exchange and local currency. Gro':;in? demands for lignite nearby will im-prove

competitive position and benefit Yugoslav economy,

- 31 -

ix. Washery - Banovici

General:- The Banovici mine, its reserves, production, labor and competitiveposition has been described in v. above.

Present Coal Treatment Facilities:- Dry screening capacity is only 1.2 r1il-lion tons, or.about 80% of 1952 output and only slightly above 60% of esti-mated 1955 capacity.

Alternative Policies:- In the past year unscreened coal has accumulated atthe Banovici mine,.because its price has been kept high relative to screenedor washed coal. It would of course be possible to sell the untreated coalby reducing the price sufficiently to make it more attractive than other sup.plies offered to ownsumers. In fact, such price reductions for export have beenmade by reducing tax obligations on the Banovici mine on export sales. As along term measure this policy however would be undesirable because it involveswaste of economic resources,

Since much of this coal is hauled. a considerable distance to Serbia,Croatia and Slovenia, the freight factor is of considerable iriportance..

More screening capacity would not appreciably imlaprove quality but merelymake grading more uniform and thereby improve consumer acceptance.

A washery installation, however, would, by reducing the volume to betransported and increasing the average he. ting value make possible importantfreight and consumption economies.,. It is largely for this reason, that thewashery project at Benovici, already under study but not included in the KeyProjects krogram vas reviewed by staff members.

An analysis indicated that a washery would eliminate 11% by weight butretain over 98% of the heating value in the total coal treated. Two productswould be.made, 1) a higher quality brown coal having 18% more heating valuewhich would be shipped to distant points within the country and for export,and 2) a miidling product with only 62% of the raw coal heating value to beused at adjacent and other nearby power plants best equipped to i4se thisfuel to advantage,

The sitp of Banovici gas chosen in preference to other sites because ofthe araple reserves, the large current production at relatively low costs adiversity of coal types, and scope for further output expansion when requiredq

Costof the Wahe The project for a washery is estimated to involve atotal costof 3,33,000 (equivalent) as followst

Subject Foreign Exchange Domestic Exchange Iotal

Rails, etc, 33,000 33,000Buildings and construction

works v1,300,000 1,30.0,000Separation plant 2,000,000 - 2,000,000Accessory equipment - 200,000 200,000

Total 2,000,000 1,533,000 3,533,000

- 32.

The domestic expenditures are for 1) railway spurs to the proposed plantsite, 2) the buildings and storage facilities required for the washery, and

3) for auxiliary equipment. The auxiliary equipment will be locally cons-tructed as well as the equipment for switching railway cars, coke weighingscales and the conveyor system for the separation plant.

The foreign exchange cost estimate is based on estimates received fromtwo contractors before December 1952, but other bids are also expected. Theestiiate of $2 million (equivalent) is for plant treating 2 rnillion tons peryear, on the basis of 3,300 tons per .8 hour shift. The plant would be ope-rated 2 shifts per day for an estimated 305 work days per year.

Flow Sheet:- line run coal delivered at the washery vwould be fed from bins toa crusher which would reduce all coal to 450 mm.(18 inches) or less in dia-meter. Conveyors would take crushed coal to screens where classificationabove and below 60 mm.would be effected. The larger sized screenings wouldbe sent directly to washing plant for separation by heavy media (probablymagnetite). Clean coal is then sent to bins for loading, while the semi-clean coal is further crushed to a rmaximum of 60 mm.diameter and then classi-fied as between above and below 10 mm.

The larger size is then again washed with heavy media, and then separatedinto clean, semi-clean and waste coal. 'he clean coal would be sized accord-ing to market needs while the semi-cleaned is crushed to 10 mm. size or lowerand added to the fines previously classified.

Power Water and Labor:- Power requirements estimated at 2.5 million kwh peryear are obtainable from the adjacent Barovici thermal plant to which coal

is now supplied.

The river Oskava nearby would furnish the necessary water.

Labor requirements are estimated at 52.

Production: Of the total input of 1,900,000 tons of raw coal, final productswould be 78% (1,482,000 tons) of clean coal, 11% middlings (209,000 tons) and

11% waste. The following table gives a comparative analysis of heating valuesand impurities in raw coal and marketable products:

Total% by W.eight Calories/kg Calories Ash Moisture

Raw Coal 100 3700 3700 26 19Marketable froducts

Clean Coal 78 L360 3401 13 20Middling (Fines 11 2306 253 40 20Viaste 11 _

3 6"5

- 33 -

Justification:- Yugoslavia's econom. would benefit by a reduction in tonnagehauled of about 200,000 tons an average distance of about 250 km. or 50 mil-lion ton kilometers per year. Since coalcQnsumption by railways per ton kilo-meter (including allowance for passenger travel) approximates 1 ton of coalfor 3,000 ton kilometers, fuel savings per year alone would approximate 17,000tons of coal. In addition, rolling stock and labor requirements are consi-derably reduced. From a monetary standpoint, at present freight rates, thesavings would exceed 210 million dinars (U700,000 equivalent)..

34 -

III. NON-FERROUS 1tETALLURGY

i. Strnisce Aluminum Project 2/

Location

Strnisce (which means stubble-field) is located in Slovenia nearthe Austrian border about 21 kilometers south of I-laribor. It is served by

a standard gauge railroad and good highways. The site, whlich was selectedby the Germans during the war, has ample room for future expansion. Thereported reason for the selection by the Germans wJas the coordination ofproduction in the Slovenian, Austrian and Hungarian areas using eitherHungarian, Austrian or Yugoslav bauxite.

Description of the Plant

Construction of the project was started by the Germans in 1943 anddiscontinued in 1945. The Yugoslavs resumed construction in 1947 and havecontinued to work on it since that date. The project when completed willproduce both aluminum oxide and aluminum. Aluminum oxide or alumina isproduced from bauxite. Aluminum is made by dissolving alumina in cryoliteand then separating the metal from the oxygen in the alumina by electroly-sis. Two tons of alumina are required to produce one ton of aluminum.

The project was originally designed to produce 100,000 to 120,000tons of alumina (depending on the type of bauxite used) and 30,000 tons of

aluminum annually. 2/. Because of the high foreign exchange cost ofequipping the plant to produce these auantities of alumina and aluminum,and to obtain the amount of powrer required, a decision was made to equipthe plant at present for only half of the original design, although mostof the buildings have been constructed to house equipment for the largerproduction. As the annual production of only 30,0CO tons of alumina, theamount requ4red for the output of 15,000 tons of aluminumt would be toosmall to be economical in this plants the alumina plant will be equippedto produce 60,000 tons of alumina and the surplus will be exported. Inthe second phase, the aluminum production will be increased to 30,000 tonsannually and the entire alumina production will be consumed.

Both the alumina and aluminum plants, which were designed byDr. IJilhelm Fulda, a recognizecl German authority, will have the latestmodern equipment includingt in the alumina plant, the Tower-Sinter processfor digesting bauxite, and in the aluminum plant, vertical stub Soderbergelectrodes wJith gas and fume collectors. Brown coal will be used to

1/ This summary is based on a rerort dated August zb, 1952, prepared byIlr. D.H. MIlson, consultant to the Bank on the Aluminum Industry inYugoslavia.

As only 60,000 tons of alumina are required for this production ofaluminum, the Germans planned to ship the surplus alumina to otherparts of Europe.

- 35 -

produce process steam and lignite will be used to make producer gas fordrying bauxite and calcining alumina, A small power plant of 7j,500 kwcapacity will be operated on the process steam and will be used to supplya part of the requirements of the plant. A townsite about 1 kilometerfrom the plant will provide housing for a large part of the permanentoperating staff. According to the Bankls consultant, the plant is welllaid out, the construction work was well done and the equipment in placewas satisfactorily erected.


In the two years in which the Germans worked on the project, theycompleted about 13 of the total construction and installation planned.This work included a substantial part of the required roads, railroads,storehouses, work shops, about 35% of the alumina plant, about 20% of theauxiliary buildings, power plant and gas producer plant, but they did nowork on the smelting plant or townsite. When the Germans retreated in 1945they reportedly took with them over 40 carloads of small equipment such aspumps, motors, instruments, etc. The Yugoslavs resumed work on the pro-ject in the fall of 1947, but progress was disrupted in 1948 by the breakwith the Cominform when equipment ordered from Hfungary and other Satellitecountries was not delivered. Lack of foreign exchange since 1949 has

delayed purchase of equipment to replace that ordered from Satellitecountries. In July, 1952, the project was about 52% completed over-all.Completion ranged from 25% for the smelting plant to 73% for the aluminaplant. The projected date for the completion of the entire plant is theend of 1953. This appears to be overly optimistic to the Bank t s consultant.A more realistic date would be 6 or 8 months later.

Raw 1:laterials and Fuel

Large proven deposits of bauxite, the principal raw material foralumina are located in Yugoslavia within 300 kilometers of Strnisce. Ata production rate of 60,000 tons of alumina annually, for which 120,000to 130s000 tons of bauxite will be required, the proven deposits wouldlast 35 years. There are other deposits and unproven reserves in Yugo-slavia which would provide several tirmies these required tonnages. Coal andlignite mines located less than 100 kilometers from Strnisce are capableof supplying the fuel requirements of the plant (175,000 tons annually) foran indefinite period. Other materials required in relatively small quanti-ties such as soda ash, limestone, lime, are all available domestically.Cryolite, Soderberg electrode material and pot lining materials, whichcomprise 10 to 120 of the cost of aluminum, must be imported.

Electric Power

The power demands of Strnisce are estimated to range from 45,300to 49,600 fw of which 38,500 to 42,800 kw or 85% will be for the smeltingplant, 5,400 kl for the alumina plant and 1,400 kT fQr the towmsite. Thesmall power plant at Strnisce will normaLly carry 2,500 lak of the load.

The remainder of the power or an average of about 45,000 kw will beobtained from the Slovenian-Croatian network. This network in July, 1952,had a firm or assured capacity of 194,200 kw. Between August, 1952 and

- 36 -

early 1954 when Strnisce's demand will come on the network, the firm

capacity of the system is scheduled to be increased by 72,000 klw from

plants now under construction. Additional lhydro and thermal capacity is

also scheduled to be added in 1955, 1956, and 1957 to provide for the

growing demands of the region.

In spite of the growing demands on the network, an analysis of the

power development program indicates adequate power will be available for

Strnisce and all other demands in the region. HoweverS even if the capaci-

ty is not added as rapidly as scheduled, there is a large factor of safety

in the fact that the Drava River has its low water season in the winter as

it rises in the Alps, whereas the other rivers in the system (the Sava,the Soca, the lKupa and Licanka) have their low water seasons in the summer

as their head waters are all in the Nediterranean Basin. This inversion

of low water seasons could supply as much as 50,000 kw in firm power under

the most favorable conditions.

The energy generated by the plants in the system totalled 1,140million 'kilowatt hours in 1951. The generation is estimated to increase

to 1,800 million kwh by 1954 and to 2,130 million kwh by 1955. Strnisce's

requirements for 60,000 tons of alumina ard 15,000 tons of aluminum are

estimated at about 380 million kwh annually, or about 205's of the total in

1954 and about 1753 in 1955.

Water Supply

The water supply for the plant and toimsite will be obtained from

wells. Four wells have been drilled to 25 meter depth ard they will have

adequate capacity for the full requirements of the ultimate capacity of

the plant. For the initial phase, there will be a surplus capacity.

Transportation Facilities

There are ample switching spaces and marshalling yards both inside

and outside the plant site and the main railroad line is double tracked

for about 2 kilometers where it parallels the plant. Most of the roads in

the vicinity of the plant are wvell built gravel roads. The road from

iWaribor to Ptuj is paved. The transportation facilities are therefore

considered satisfactory in all respects.

Labor and IJanagement

The labor force estLmated to be required for the initial phase

of production at Strrisce is 1,271, including the toJvmsite. At present,

there are 1,440 engaged, on construction and installation work, Some of

these will remain as a part of the permanent operating staff. There is an

ample labor pool in the area to supply the remainder required.

Host of the technical operating and managerial staff is yet to be

recruited, but the nucleus of these staffs now at the plant appeared, to

the Bank's consultant, to be competent and confident of their ability to

operate the plant. The Chief Engineer worlced under Dr. Fulda who designed

the plant. As both alumina and aluminum are being produced in Yugoslavia

- 37 -

at present, it may be assumed that there i-s sufficient technical slill inthe country to solve most of the operating problems which might arise.Problems which might arise in starting up the plant will, in general, betaken care of by the equipment suppliers who are committed to send theirspecialists to Strnisce to start operations and to train Yugoslav operatorsC-erman consultants familiar with the Tcower-Sinter process (wh1ich is in useat Lunen, Gennany) are also available.

Production Costs

To obtain an approxinate production cost, the Bank's consultantmade estimates based on man-hourss export and import prices, shippingdistances and probable operating efficiencies. On this basis, he was ofthe opinion that production costs (exclusive of capital charges) would bereasonably well in line with published American costs and competitive withEuropean producers in plants of similar capacity.

Cost of the Project

The cost of the plant with a capacity to produce 60,000 tons ofalumina and 15,000 tons of aluminum is estimated to be the eouivalent of$58,315,OO0. Of this, about 30% or 518,122,000 will be for imported goodsand services. The total cost, however, includes buildings, foundation,etc., for a capacity of 100,000 tons in the alumina plant and rectifiersfor 30,000 tons of aluminum in the smelting plant. A breakdovm of thecost showing the expenditures to the tlhird quarter of 19-2 follows:

enditures Expressed in Thousands U.S. DollarsEquipmen

Period Construction Domestic Imported Installation Total

To Third fluarter,1952 20,023 4.,715 13,215 1,769 39,722Tb complete 6,227 2,316 4 907 4,878 18,328

-26,250 7,031 TFfi2 6p647 58--05

of the $4,907,000 in foreign exchange required to complete theprQject, $3,736,000 is desired from the Banlc and $1,171,000 would be fi-nanced through the German Loan.

List of Goods

The proceeds of the Bank loan would be expended for payments forequipment and materials for the various divisions of the plant. About60% of the equipment is under contract.

_ 38 -

Department Amount

Alumina Plant

Crushers $ 54,000Conveying equipment 42,000Hoists and traveling cranes 69,000Autoclaves and accessories 86,oooI'lachines and auxiliary equipment for alumina production 1998,000

Smelting Plant

Transformers 300,000Electrical control equipment 520,0coTransformer oil 31,000Aluminum bus bars 2344,0ooLow frequency melting furnaces 114,000Traveling cranes 4o.,o00Cathode blocks and accessories 386,000Soderberg anode materials 322,000Cryolite 194,000Aluminum fluoride 61,000Mleters and other instruments 49,000Equipment for anode plant h70, 000Cryolite recovery equipment 130,000

Laboratory equipment 20,000

Plant Auxiliaries

Railway track materials 146,000

Coal conveyors 75,000Dust removers 35,o00Ash removing plant 15,000Electric trucks for interior wrork 25,000Trucks, gasoline 4o,oooWorkshop equipment 440,000Miscellaneous small toolss pumps, motors, etc. 40,coo

$ 3,736,0co

Markets

As the capacity of the smelting plant will initially be only15,000 tons of aluminum requiring only 30,000 tons of alumina, there willbe a surplus production of about 25,000 to 30,000 tons of alumina peryear at Strnisce until the smelting plant capacity is increased. As thecurrent domestic requirements of alumina are met by domestic production,the entire surplus production at Strnisce will be available for exportinitially. At present, there is a market for alumina in Austria andpossibly in Norway and Germany, How long these markets will continue toexist is problematical. If they should disappear, the proposed increasein smelting capacity to 30,000 tons annually could consume the entireproduction.

- 39 -

Ihe current capacity for the production of aluminum in Yugoslaviais 2,800 tons annually. The domestic requirements are estimated at about5,800 tons annually. Assuming that Strnisce will supply the deficit indomestic requirements$ 12,000 tons of aluminum ingots would be availablefor export. This relatively small amount can be readily absorbed inEurope. If the export market should be reduced, there are many potentialuses for the metal which could increase the domestic consumption consider-ably. However, the long run prospect is that aluminum consumption 1illrise in Europe and Yugoslavia should have no difficulty in exporting12,000 tons of aluminum annually.

Justification

At present Yugoslavia is exporting bauxite and has exported itfor many years. It is a relatively low priced mineral and the exportsbenefit the balance of payments only slightly. The export market foralumina and aluminum is good. The value bf alumina is 13 or 14 timesthat of bauxite and 'the'value of aluminum is 65 to 70 times that of baux-ite. The net value of the exports of 28 to 30,000 tons of alumina and12,000 tons of aluminum after deducting the import costs is estimated at*the equivalent of $7,166,000 annually. This would be a substantial bene-fit to Yugoslavia's balance of payments. Furthermore, the bauxiteconsumption of Strnisce would not reduce bauxite exports as the bauxitefor Strnisce would come from a proven deposit not being used as a sourcefor exports. There is also the possibility that more domestic use couldbe made of aluminum conductors for transmission lines and for otherelectrical requirements which would free that much more copper for export.As copper brings a higher price than aluminum, this would be advantageous.

January 28, 1953

III. NON-4RROUS IMETALLUTTY

ii. Lece Lead-Zinc-Gold Itine and IIill

Location

The Lece lead-zinc-gold mine is located about 90 kilometers south-west of Nis in Serbia. It is not on a railroad, but is served by goodhighways. The flotation and cyanization mill under erection is connectedwith the mine by an overhead cableway system, about 7 kilometers long.Final products of the mill - lead and zinc concentrates and gold bullion -will be trucked 45 kilometers to Leskovac station on the major railwayline, Belgrade-Nis-Skoplje.

Description

The Lece mine was worked before World War IIU but the operationswere on a small scale. Less than 20,000 tons of ore per year were treatedin a small flotation plant. Because of the nature of the ore, flotationtreatment alone resulted in inadequate recoveries of the gold and basemetal contents of the ore. After the war, Yugoslav representatives con-sulted various firms including the Dow Company, well-known metallurgicalplant specialists in Holland, with a view to installing a more efficienttreatment plant at Lece. Tests shared that a combination flotation-cyanization plant would afford a much higher recovery of both gold andbase metals and would prove profitable.

This project was among those examined by the Bank's mining con-sultant, II. Francois ivillet, in 1949 and was highly recommended by him.Because of delays in negotiation, the Yugoalav Government arranged tofinance the project in part by use of funds under an Export-Import Bankloan.

Ore Reserves

Ore reserves in the proven and probable category are estimated at8o0,000 tons assaying 3.2/) leadp 5% zinc and 8 grmis of gold per ton. Thereare also indications that about 300,000 tons of possible ore exist, butthis estimate cannot be considered as exhausting the possibilities at Lece,since the lack of adequate power supplies in the postwar period has pre-vented a full delineation of the ore bodies in the Lece area with powerdrills.

Rehabilitation and Expansion Program

The Lece mine is to be equipped to produce ore at the rate of250 tons per day, 75,000 tons per year. At this rate the reserves will beadequate for 10 years operation. Ore is to be mined from 4 existing shaftsand the "Suta" adit. lining will be done with compressed air drills andmechanical shovel loaders. The ore will be hauled by locomotives to orebins about 500 meters from the adit entrance. From these bins, the orewill be transported by overhead cableway (7 kilometers) to the flotation-cyanization plant.

At this treatment plants the flow sheet provides for flotation toproduce a lead concentrate containing 65% lead and 90 grams of gold perton. The rejects will then be sent to the cyanization plant for recoveryof the remaining gold and the residues would then be reflotated for pro-duction of a zinc concentrate analyzing about 60% zinc. It is estimatedon the basis of tests, thiat the combined treatment of flotation will resultin recovery of 90% of the golds 65% of the lead and 85% of the zinc con-tained in the ore as mined.

Full production on an annual basis is estimated as follows:

Tons Assay per ton

Lead Concentrates 2,t400 Pb 65% Gold 90 gramsSliver 200 grams

Zinc Concentrates 5,4o.o Zinc 60%

Gold Bullion 324 Net gold production

Construction Schedule

As of October 31, 1952, Yugoslav officials report tllat the statusof completion of different parts of the program were as folloi-Ts:

11ine shaft 90,Transport to cableway 100%Cableway 100%Power station lOO1Treat.ment plant 75%Roads and housing facilities 100%J

All the mechanical equipment for the treatment plant had alreadybeen received at the site and was in the process of erection.

Power

For each ton of ore extracted and processed 50 kilowatt hours ofelectric energy will be required. The annual requirements will thereforebe about 3,750,000 kcwh. The mine is now supplied with energy from athermal plant at Belo Poije and will soon be connected into the Serbiannetwork.

Labor and Management

Labor requirements for fuull production are estimated at 382. Itis anticipated that selected supervisory personnel will be available fromother mines to assure efficient operations. Arrangerents have also beenmade with the equipment suppliers for technical assistance in operatingthe flotation-cyanization plant in the early stages to minimize difficultieswith the cyanization aspects. Flotation plants have been operated atnumerous other mines in Yugoslavia for at least 20 years, so that no oper-ating difficulties are anticipated at Lece.

- 2 -Cost of Production

On a conservative basis, using higher tlhan average wage rates,depreciation calculated on a ten year basis and ample allowances for othercosts, the over-all cost of production and processing is estimated atabout the equivalent of $13 per ton. The net value of the products ob-tained from a ton of ore should be about t15 per ton. The margin of profitshould tiierefore be about $2 per ton. If the life of the mine should beextended by the discoveryr of flurther reserves, the depreciation costs wouldbe lower and the over-all costs somewhat less than 513 per ton.

Cost of the Project

The total cost of equipping the mine and mill i3 estimated at$3,670,000 eouivalent, of which about 20, will be in foreign exchange. Abreakdown of the cost follows:

Expenditures Expressed in Thousands U.S.$Equipment

Period Construction Domestic Irmported Total

To Third Quarters 1952 2,347 285 618 3,250To complete 220 65 135 120

2,5o7 370 3,670

Ihe construction expenditures include exploration, development,shaft sinkdng and adit driving as well as construction of buildings.

Included in the $618,000 foreign exchange expendLtures alreadymade are 14140,000 from the Export-Import Bank and $178,OCO from Yugoslavia'sown resources. The amount required to complete the project, $135,000 isdesired from tne Bank.

List of Goods

All of the eauipment required for thne completion of the plant has

been on order for some time and the balances due would be paid from the

proceeds of a Bank loan. The equipment will come from Italy, Belgium andGermany. The goods and amounts due are:

Goods Amount

oil circuit breakers $ 3,000Electric motors and transformers 51,000Cables 40, 000Seamless tubes 36 000

Markets

Lead and zinc concentrates and gold bullion will be shipped by truckto Leskovac's railway station on the miain rai way line, Belgrade-Nis-Skoplj e.Lead concentrates will be smelted at Trepca lead smelter 190 kiLlometers

13.- -

distant. Zinc concentrates will be shipped to the Celje Slovenia zincsmelter. Gold bullion, if it requires further refining, will be shippedto the Bor refinery in Serbia. Lead, zinc and gold are already exportedon a large scale by Yugoslavia.

Justification

At full production the Lece mine should provide gross foreignexchange earnings of the equivalent of about $1, 200,000 with lead and zincpriced at 10 cents per pound and gold at $35 an ounce. Foreign exchangecosts for the chemicals and other supplies required to operate the flota-tion and cyanization plants and for maintenance parts should not exceed$100,000 annually.- The net foreign exchange earnings should therefore beaboutzLel million annuaUy. In addition, the mine should be a profitableventure.

January 27, 1953

*-; lJ$-_

IV. IRON LMD STEL

i. Zenica Iron and Steel Works

Location

Zenica is located on the Bosna River in the province of Bosnia andHerzegovina about 70 kilometers north of Sarajevo. Tt is on a standardgauge railway extending from Brod to Sarajevo. It is also served by mainhighways.

Description of 3Eisting Plant

The original steel plant at Zenica was built in 1892. It consistedprimarily of a rolling mill, the billets for w.7hich were sent from Austria,The site was selected because of the availability of coal, water and cheaplabor. The installations at Zenica prior to World liar It consisted of the

following:

Average DateAnnual of

Equipment Capacity Production Installation

Steel Mill3 Open hearth furnaces 25 tons 25,000 tons 1898-19132 Open hearth furnaces 45 n 55,000 " 1937-19381 Electric furnace 3 " 2,800 " 1937

Rolling MillHeavy sections and rails 160,000 tons 75,000 tons* 1937-1938

Medium sections 25,000 " 23,000 " 1892-1898Light sections 25,000 " 15,000 n 1892-1913

* Including semi-rolls for medium and light mills.

The plant was damaged during the war. The wartime damage was repaired bythe end of 1947 and an expansion program started in 1948. Since that time

three new open hearth furnaces (largely from reparations) have been placed

into operation. The plant is the largest steel mill in Jugoslavia and its

existing facilities including railroad yards, shops, warehouses, employeehousing, etc. provide a good base for further exnansion.

j This summary is based on a report dated 22 September 1952 prepared byMr. J. E. Holgate, Consultant to the 3ank on the iron and steel industryof Tunnlavia.

40 45

Prewar and Postwar Production

The annual prewar and postwar production at Zenica were:

Product 1939 1946 1948 l950 1951

Open hearth steel, tons 76,569 4 49 137,304 183,754 185,155Electric furnace, if 2,800 82 1,586 2j870 1,992

Rolled products ' 54,919 28,872 117,166 99,722 130,520Wire and rods n - 6,875 9,114 9,582

The Exoansion Proaram

The expansion program now in progress is divided into two phases,

the first of which is scheduled to be completed in 1954 and the second in

about 1956. The new facilities to be installed in the first phase willresult in a fairly well integrated plant and a better balanced. production.

They will include:

Facilities Annual CapacityTons

CokeOne battery of coke ovens complete with by-productplant and auxiliaries 200,000

Pig IronOne blast furnace complete with ore handling,crushing and sintering equipment and auxiliaries 200,000

SteelFour 60-ton fixed open hearth steel furnaces withone 800-ton metal mixer 180,000

Rolling MillBlooming mill and soaking pits for producing semi-rolled products for other mills 450,000Medium mill 150,000

Light mill 70,000Wire and rod mill 40,000

Special improvements to old mills to increase output 6o,ooo

F'orgesSeven hammer forges for light work 2,000

one 850-ton press forge for heavy work 3,000

one 5,300-ton press for railroad car wheels 7,000

AuxiliariesWater supply (3.5 cu.m. per sec.)Maintenance Shops (10,000 sq. m.)Railway Tracks (60 kan.)O.as holder (40,000 cu.m.)Oxygen plantRiver diversion

In addition, the old rolling mill will be modernized to increaseits capacity.

The new installations will transform Zenica from a plant limited tothe production of steel iigots (from pig iron produced elsewhere) and a smallrange of rolled products to an integrated plant producing its own coke, pigiron, ingots, blooms, rolled nroducts and forgings. The gases from the cokeovens and blast furnaces will provide most of the heat requirements of theplant and by-products (tar, phenols, toluenes, ammonium sulphate, etc.) ob-tained from the manufacture of coke will provide new salable items. Theblast furnace slag will be useful on farms. At present the plant obtainstwo-thirds of its pig iron from Vares and one-third from Sisak, and uses ahigh percentage of scrap. With hot pig iron available from its own blastfurnaces, the production of steel from the open hearth furnaces can be in-creased and they will use a smaller percentage of scrap, most of which isnow imported. The new blooming mill will increase the efficiency of themedium and light rolling mills and reduce the cost of their production. Thenew open hearth furnace canacity will permit the scrapping of two old andinefficient open hearth furnaces. This will reduce steel production about70,000 tons per year but this loss will be offset by the increase in effec-tive capacities of the other furnaces through the use of hot pig iron. Theadded capacities 4n the medium, light and wire and rod mills will permitthe plant to supply more end products for domestic consumption and the forgeswill supply some new products (car wheels and tires) not now available inYugoslavia. The diversion of the course of the Bosna River will make access-ible without bridges a large tract of level land for a large nart of thenew works.

Although the main items of equipment for the expansion program arebeing imported, a considerable amount of equipment Is being produced domes-tically, especially the parts necessary for repair and In

Documents

Public Disclosure Authorized FILE COPY ANNEX TO T.O. 4a...i Kostolac Thermnal Power Plant 1 - 3 ii Vinodol Hydro Power Plant 4 - 7 iii Transformer Stations and Transmission Lines 8