Bosnia's sole aluminium smelter Aluminij Mostar reported on Tuesday record annual production of 123,000 tonnes of metal and output of $460 million in 2008, its general manager Mijo Brajkovic said.

Revenues went up by close to 10 percent over 2007 while exports increased by 7 percent to 370 million Bosnian marka ($253.4 million), Brajkovic told a news conference. He added that local sales also increased by 27 percent.

The 2008 results would have been much better if we had not been forced to cut the output by a quarter last December because of the global financial crisis and high electricity prices, he said.

The smelter, based in the southern town of Mostar, has long complained over what it said is discriminatory treatment by the power regulator and the government of Bosnia's Muslim-Croat federation, the region of Bosnia where the company is located. Brajkovic said the government treated the company differently from other large exporters, forcing it to buy expensive electricity from abroad instead of securing it regular power supplies at local prices.

Because of high electricity prices and lower prices of the metal at the world market the company lost around $34 million last year, he said.

Several local aluminium processors which buy the metal from the smelter and export about 70 percent of their products had said they would have to follow suit if Aluminij cuts output.

But Brajkovic expressed hope the situation will improve in the second half of 2009, enabling the company to produce a record 136,000 tonnes of aluminium at the end of the year.

He said that company plans to cut spending this year but that it does not intend to reduce the workforce. Aluminij Mostar's sell-off to Swiss-based commodities trader Glencore has been stalled for more 19 months over a row on electricity prices and environmental issues. (Reporting by Tina Jelin; Writing by Maja Zuvela; Editing by Rupert Winchester)

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