Pavgord withdraws from Koksara Lukavac: Coal and all raw materials supply halted

(Patria) - The company H&P d.o.o. informed the bankruptcy administrator of Koksara Lukavac that it has decided to cease further activities related to the lease and management of the production process in Koksara and will halt the supply of coal and all other raw materials from December 22, 2025.

H&P d.o.o. is the company that bought Nova željezara Zenica and is part of the Pavgord Group.

"We hereby inform you that, after a comprehensive analysis of business, financial, and regulatory circumstances, we are forced to decide to cease further activities related to the lease and management of the production process in the bankrupt company Koksara d.o.o. As of December 22, 2025, we will halt the supply of coal and all other raw materials, and from the aforementioned date, we will not undertake new obligations related to the supply and continuity of the production process," the letter states, adding that all activities for the adequate shutdown of the furnaces should be undertaken.

"We entered this arrangement with the clear intention of contributing to the stabilization of Koksara's operations, preserving domestic production, and ensuring strategic supply for Nova željezara. However, during the implementation of activities, we faced a series of objective circumstances that made this engagement economically and commercially unsustainable," explained H&P.

First and foremost, they state, there has been a significant increase in operating costs, including a six percent increase in electricity prices, and further increases in transportation costs have been announced.

In addition, existing additional financial burdens and uncertainty regarding future obligations have led to continuously negative business results.

"A particular risk is also the announced introduction of the CBAM mechanism (Carbon Border Adjustment Mechanism) from January 1, 2026, which will directly impact the possibility of exporting certain products, as well as the introduction of additional fees and regulatory obligations. The aforementioned circumstances significantly reduce the competitiveness and long-term sustainability of production.

Additionally, the current legal framework in Bosnia and Herzegovina allows manufacturers who, due to CBAM restrictions or other reasons, are unable to export to the European Union market, to redirect their products to the domestic market. Such a scenario will inevitably lead to increased supply, disruption of market balance, emergence of unfair competition, and a further drop in iron prices, which would have a direct and additional negative impact on our business results," they stated in the letter.