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Near Podgorica: KAP and FDI

Podgorica KAP
Podgorica – KAP

The aluminium company KAP near Podgorica has long been a symbol of the problems of the Montenegrin economy. Aluminium has been Montenegro's dominant industry, accounting for more than 70 per cent of exports in 1999. In 2000 ESI wrote about "the most important enterprise in Montenegro":

"KAP is the republic's largest company, with some 4,000 workers. It is also the biggest customer of a whole range of Montenegrin businesses, placing it at the head of a production chain… It is the largest customer of the Montenegrin railway, and one of the largest of the port of Bar. It pays more than US$1 million per month to Jugopetrol, and is by far the biggest customer of the electricity utility, Elektroprivreda Crne Gore. Given this dominant position, it is not surprising to find that there are no hard budget constraints on the company, which despite chronic unprofitability is able to survive and even expand through huge indirect state subsidies."

However, things have changed a lot since 2000. Privatisation, restructuring and the rise in world market prices of aluminium have brought an increase in output and profitability. Russian Oligarch Oleg Deripashka bought KAP and the Montenegrin bauxite mines, and thus controls a considerable share of the country's economy.

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