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Aluminij shareholders reject lease bid from Israeli-Chinese group

The logo of the Aluminij Mostar aluminium factory is pictured in Mostar

SARAJEVO (Reuters) - Shareholders of Bosnia's indebted aluminium smelter Aluminij Mostar on Friday rejected as inadequate a bid by an Israeli-Chinese consortium to lease the plant's foundry, a move which would be a first step towards restarting production.

The smelter was shut down last July over debt incurred because of high electricity and alumina prices. An attempt to find a strategic partner had failed after London-listed miner and commodity trader Glencore <GLEN.L> and other investors pulled out of talks on a possible takeover.

The offer from a consortium of Israeli M.T Abraham Group, China Machinery Engineering Corporation (CMEC) and China Non-Ferrous Metal Industry's Foreign Engineering & Construction to lease the foundry was rejected by 78% of Aluminij's shareholders.

The group had previously made two bids for the whole company, which were also rejected.

The government of Bosnia's Bosniak-Croat Federation, which owns a 44% stake in the smelter, said it declined the latest offer because of technical errors which needed to be reworked and other terms that were vaguely defined.

Small shareholders also own a 44% stake and one of them, Zlatko Topic, told state radio the 15,000 euro bid was "flatly rejected" as shameful and humiliating because of the low price.

Representatives of the Croatian government, which owns a 12% stake in the company, voted in favour of the offer.

Stipo Buljan, the Federation's government representative at the meeting in Aluminij's home town of Mostar, said all sides had agreed to work together over the next 30 days to find a new solution to rescue the company, which employed 900 workers and was among Bosnia's top exporters .

Federation Industry and Energy Minister Nermin Dzindic has said that bankruptcy is an option.

Aluminij, which accumulated debt of almost 380 million Bosnian marka (162.4 million pounds), is being investigated by the financial and tax police.

(Reporting by Daria Sito-Sucic; Editing by Kirsten Donovan)