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Kosovo's former industrial giant

Trepca
Mining facility in Trepca

Michael Palairet, professor at the University of Edinburgh, is a leading authority on the economic and social history of the Balkans. In 2002 ESI's Lessons Learned and Analysis Unit in Kosovo commissioned him to undertake research on Kosovo's mining giant Trepca.

With up to 23,000 employees, Trepca was once one of the biggest companies in socialist Yugoslavia. In the 1930s a British Company gained the rights to exploit the Stari Trg/Stan Terg mine close to Mitrovica. After World War II, under socialist management, the company expanded dramatically.

"The golden age was one in which employment, direct and indirect, expanded massively and the combine paid (by local standards) a decent wage. Yet the 'golden age' was a mythological era, when Trepca depended on the principle of non-accountability, in which investment and current deficits were funded externally. So long as the funding kept rolling in, the incapacity of Trepca to support itself was nobody's problem. Easy funding came to an end in the 1980s, and with it Trepca's 'golden age'"

"The Trepca system 'as a rule' lost money under Yugoslav socialism … Because of Trepca's incapacity to generate funding of its own for investment, all investment funding had to be financed externally, by fund providers who did not anticipate that they would see any return on (or of) their capital."

But while Trepca consistently performed poorly, this was not because it could not have been managed more effectively: "[U]nlike most heavy industry, which lay in the comparative disadvantage sector, Trepca had good mining assets and low cost access to energy, so on the face of things there were no structural reasons for its inability to trade profitably."

February 2007

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