Even though it was badly struck by the global economic crisis in 2008 and especially in 2009, Bulgaria's industrial sector started slowly to pick up, with the exports gaining momentum, and the government and business increasingly realizing the importance of an export-oriented economy.

Bulgaria Registers Highest Export Growth in EU 27 in 2010 Q1-Q3

December Eurostat data showed that Bulgaria registered the highest year-on-year growth of its exports of all EU 27 countries in the first nine months of 2010. Bulgaria's exports grew by 33% in January-September 2010 compared with the same period of 2009. Bulgaria's imports grew by 9% year-on-year Thus, in the first three quarters of 2010 Bulgaria's exports amounted to EUR 11.3 B, up from EUR 8.5 B in the same period of 2009; its imports were EUR 13.5 B, up from EUR 12.5 B. Bulgaria's trade balance improved substantially even though it is still negative – in January-September 2010 it went down to EUR 2.3 B, from EUR 4 B in the same period of 2009.

Bulgaria EU's Greatest R&D Laggard, Focus on Engineering Urged

In August, a report of the Bulgarian Industrial Association said Bulgaria's economy is ranking last in innovations and research and development. The BIA research has shown that Bulgarian companies export primarily products with low added value, invest little in new technologies and R&D, and have low dynamics when it comes to acquiring new patents. The BIA recommends that Bulgarian should come up with a national innovations strategy, and should increase its state R&D spending to 0.8%-0.9% of the GDP by 2020, while also introducing incentives for private companies to invest in research and development activities.

AmCham Road Show to Lure US Investors to Bulgaria in May 2011

In December, Valentin Georgiev, Director of AmCham Bulgaria, revealed the American Chamber of Commerce in Bulgaria  is staging a business road show in the USA in May 2011 together with the US Ambassador to Bulgaria James Warlick and the Bulgarian Ambassador to the USA Elena Poptodorova. The project will essentially be built along the first such business road show in the US organized by AmCham Bulgaria, ex US Ambassador to Bulgaria John Beyrle, and Bulgarian Ambassador to the USA Elena Poptodorova back in 2007 shortly after Bulgaria joined the EU.

In November 2010, the first "Realizing the Potential - Bulgaria on the Outsourcing and Off-shoring Map" conference in Sofia, an initiative of the American Chamber of Commerce in Bulgaria (AmCham) and the governmental InvestBulgaria Agency, in cooperation with Colliers International,  was attended by more than 300 local and international delegates. According to the participants in conference, Bulgaria has the potential to become a sort of a "Silicon Valley" of the Black Sea region.

Italy's Confindustria Balcani Kicks Off in Bulgaria's Sofia

In October, more than 400 businesspeople gave the start of Confindustria Balcani, the Balkan association of Italian companies, at a special ceremony in the Bulgarian capital Sofia. The brand-new federation brings together Italian entrepreneurs operating in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, Serbia and Romania. Estimates have shown that Bulgaria can expected between EUR 1 B and EUR 3 B in foreign direct investment from Italian companies over the next few years.

METALLURGY

3rd Auction for Assets of Bankupt Bulgarian Steel Behemoth Kremikovtzi Scheduled after 2 Failures

2010 saw the final steps for the liquidation of what once was the largest Bulgarian steel plant, Kremikovtzi near Sofia.

The receiver of the bankrupt Bulgarian steel factory Kremikovtzi scheduled February 7 as the date for the third attempt to sell off the failed behemoth's assets.

Two prior auctions were held over the fall, but failed because actually no one turned out to bid for Kremikovtzi, which is considered the pride of communist-era industry in Bulgaria.

Unlike the first closed-bid auction, the second was with direct bidding. The starting price was BGN 452.4 M, down by 20% over the initial tag at the first tender at BGN 565.5 M, which also failed due to lack of prospective buyers. For February's bid, the initial price will drop even further (with 31% from the initial one), and will be set at BGN 395 M.

The factory's receiver Tsvetan Bankov expressed confidence that Kremikovtzi's assets will eventually be sold and its creditors will be redeemed. Bankov attributed the failure of November 5 auction to what he called "too high a price".

The site and assets of the struggling company, built in the 1960s, were offered for sale four months after the behemoth was sent into liquidation, its businesses - wound up and its assets - offloaded.

Last year the smelter shut down some of its furnaces due to lack of raw materials after Ukrainian tycoon Konstyantin Zhevago canceled a deal with the plant. It was previously owned by Pramod Mittal, the younger brother of ArcelorMittal CEO Lakshmi Mittal.

The auction comes nearly a year after the majority of creditors of the troubled steel-maker rejected the rescue plan for the struggling company, while its thousands of workers staged numerous rallies to call on the state to approve the recovery plan and bring to justice those, who have allegedly siphoned the company.

The sprawling communist-era behemoth near Sofia was declared bankrupt end of May and cleared for liquidation in June, after years of struggle with dire economic conditions, and multiple controversies about mismanagement and financial draining. In a high profile case, Alexander Tomov, former CEO of Kremikovtzi and Bulgarian football great CSKA, is currently facing trial.

As of December 2010, the total debts of Bulgaria's former largest steel-maker amount to BGN 1,9 B, whereas the market value of all of its assets has been estimated at BGN 837 M. Kremikovtzi, one of Bulgaria's biggest companies, provided jobs for over 5 000 people and its future was a politically sensitive issue ahead of the general elections in the summer of 2009.

Different views about the future of Kremikovtzi site have been recently discussed by the Bulgarian public and authorities, including a possible retainment of the operating mill, creating a museum, a residential neighborhood and a new industrial park.

Bulgarian Steel Mill 'Stomana' Regains Jobs Lost to Crisis

In October, Bulgaria's largest operational steel-maker Stomana Industry re-hired 100 metallurgy workers. The plant based in the city of Pernik is starting to regain the jobs it had to shed as the economic crisis kicked in. Back in November 2008, the company owned by the Greek Tempo Metal laid off about 300 workers. Stomana Industry is now the largest Bulgarians steel-maker in operation, after the Kremikovtzi plant in Sofia, which is the only larger one, has run into bankruptcy.

Bulgaria's Metallurgical Industry Boasts Modest Recovery in 2010

In November, it became clear that after the 2009 collapse, Bulgaria's metallurgical industry has started to make a comeback with growth of 3.7% in the first nine months of 2010 year-on-year.

Thus, in January-September 2010, the Bulgarian metallurgical plants produced a total of 562 100 tonnes of steel. The production of non-ferrous metals has also started to grow, though by an even smaller share, according to data of the Bulgarian Association of the Metallurgical Industry (BAMI). BAMI forecasts that Bulgaria's 2010 steel production will surpass the 2009 output.

Yet, even though the Bulgarian metallurgical sector started growing again, its growth is very modest, and it is far from reaching the pre-crisis level after the 2009 collapse by some 50%, according to Politimi Paunova, BAMI Director. Paunova believes that Bulgaria has the pontetial to become a hub for the production of non-ferrous metals. As far as the steel-production is concerned, in her words, if the Kremikovtzi steel-maker does not recover and start production again, Bulgaria will become a net importer of steel.

Bulgaria Still Stands Chances to Attract Huge Investment by Austria's Voestalpine

In July, Austrian company Voestalpine said it may be considering Bulgaria again as a potential investment destination in 1-2 years. The decision of the Austrian steel giant Voestalpine AG to make a large-scale investment in a new steel plant in the Black Sea region is still up in the air. Voestalpine announced in early 2008 that it planned to invest EUR 5 B in the building of a steel plant in either Bulgaria, Romania, Turkey or Ukraine.

ENGINEERING AND MACHINE-BUILDING

70% of Honeywell Bulgaria Operations Serve Clients Abroad

Bulgaria is an integral part of Honeywell's global customer development strategy, the company said in November. The Bulgarian branch of the multinational American giant has installed more than 60 Honeywell systems in Bulgarian industrial plants and completed more than 100 international engineering projects.

One of the major examples of projects that Honeywell has carried out in Bulgaria is the modernization of the Maritsa East 2 thermal power plant where it delivered its Experion PKS platform, which is a scalable plant control and ESD system, installed and fully supported by the local Honeywell team in Bulgaria. At the same time, however, more than 70% of the Honeywell-Bulgaria activities, services and production are dedicated to projects and services abroad. As of November 2010, Honeywell was the employer of more than 100 specialists in Bulgaria.

NAVIBULGAR to Build 6 Ships in Bulgaria's Varna

In August, the Navigation Maritime Bulgare company (NAVIBULGAR) is planning to construct at least 6 ships in the ship building yard of MTG-Dolphin PLC in the Bulgarian Black Sea city of Varna.

The ships have to have a capacity of 17 500 dwt. The idea of the company is to create an entirely new fleet of identical ships, which will replace the already depreciated ones.

"We plan to take out of use the ships with capacity of 25 000 dwt and 38 000 dwt," he said.

The consolidated net loss of BGN 63 M for 2009 was due to the policy for reconstruction of the company.

Shortly before that NAVIBULGAR purchased 4 new ships for a total of USD 130 M.

Navigation Maritime Bulgare (NAVIBULGAR) is the successor to a shipping company established in 1892. Until August 14, 2008 the company was the biggest State Ship Owning Company (BMF) with over a century-old tradition and experience in the shipping industry. Presently, being a private company with 70% German - Bulgarian capital, 116 years inheritance and adopting the principles of a private key market player, NAVIBULGAR has an even stronger position in Bulgaria and on the international scene.

The investments must reach BGN 780 in 10 years and the company must purchase a total of 25 new ships.

US Company Buys Israeli Tracking Devices Producer with Bulgarian Plant

In August, US company 3M Co has announced it is purchasing the Israeli human tracking devices producer Attenti Holding SA, which has industrial facilities in Bulgaria's Plovdiv. Attenti Holdings was formally Dmatek Ltd., which was traded on the London Stock Exchange, before its acquisition in 2009 by Francisco Partners, Cavendish Asset Management, Sequoia Capital and CEO Yoav Reisman for USD 80 M. Attenti has 340 employees in Tel Aviv, at three sites in the US at Tampa, Milwaukee and Naperville in Illinois, and at Sydney, Australia, and Plovdiv in Bulgaria. The company estimates that its sales will reach USD 100 M in 2010.

Caterpillar to Open Commercial Office in Bulgaria

In September, one of the world's largest manufacturers of construction and mining equipment, engines and turbines, the US company Caterpillar announced it is going to open a trading office in Bulgaria. This was agreed during a meeting between Bulgarian Economy Minister Traicho Traikov and two of the Vice Presidents of Caterpillar, Tana Utley and Gregory Folly

Bulgaria Registers Surplus in Electronics Trade with Germany

In the first quarter of 2010, Bulgaria's electronics export to Germany has surpassed its import of German-made appliances. For the first time, Bulgaria registered a surplus in its electronics trade with Germany, reported the German technology news website evertiq.de.

Bulgaria's electronics export to Germany amounted to EUR 71 M in the first three months of 2010, while its import of German-made electronics was worth EUR 69.7 M.

The site evertiq.de points out that while Germany's electronics export as a whole dropped by 0.6% in the first quarter of 2010, Bulgaria's almost doubled with an increase of 98.5%.

PHARMACEUTICALS

Bulgaria's Sopharma Breaks Ground of BGN 70 M Plant

In December, Bulgarian pharmaceutical giant Sopharma formally launched in Sofia the construction of its new factory, a massive investment worth BGN 70 M. The company pointed out that the construction of new factories demonstrates the revived dynamics of the Bulgarian economy deriving from the companies investing in innovative manufacturing and modernization.

The new facility will be producing up to 4 billion pills per year of over 100 different types of medicines, and will employ 420 people once it is completed. Sopharma boasts a boost of its exports, with stable positions on its traditional foreign markets and growth in its exports on markets it entered more recently such as Turkey, Serbia, Austria and Bosnia and Herzegovina. The company recently announced it would open a subsidiary in Poland, and it is about to complete its procedures for registration in China and Finland. Sopharma is responsible for the bulk of Bulgaria's exports of pharmaceutical products.

In the first half of 2010, the export of Bulgaria's largest pharmaceutical company Sopharma has seen a substantial growth of 38% year-on-year.

The major Bulgarian pharmaceutical producers - Sopharma AD, Medica AD, Bulgarian Rose – Sevtopolis AD, Momina Krepost AD, Unifarm AD, and Septona – also saw their sales on the rise. The combined Q1 turnover of the six companies went up by 14% reaching BGN 154.2 M.

Citigroup Fund Buys 38% of Bulgarian Pharmaceutical Company

In September, Citi Venture Capital International, a subsidiary of global investment bank Citigroup announced (CVCI) it is going to purchase 38% of the Bulgarian animal health company Huvepharma. Huvepharma is a manufacturer of pharmaceuticals for the livestock market, specializing in the poultry, swine and cattle segments.

It also produces nutritional feed additives and niche veterinary products. 65% of Huvepharma's produce is exported to the EU and North America. Huvepharma is the majoring shareholder of Biovet Peshtera, a leading European manufacturer and marketer of medicated and nutritional feed additives, enzymes, bulk active substances and pharmaceuticals for animal productivity and health.

Pharmaceutical Firm Actavis Sells Major Bulgarian Distributor

In March, International pharmaceutical company Actavis Group has announced it will sell its major Bulgarian distributor Higia Jsc. Higia Jsc, one of the largest distributors of pharmaceuticals in Bulgaria, was acquired by the Actavis Group in 2005. Higia has been sold to a private investor for an undisclosed amount.

PPD Opens Its Largest Europe Center in Bulgaria's Sofia

In May, US company Pharmaceutical Product Development (PPD), Inc., opened a pharmacovigilance and medical communications center in Sofia, Bulgaria.

The center will deliver PPD's full range of drug safety, medical information and medical writing services to meet growing client demand. Sofia will become the company's largest safety center and its third European hub for medical communications contact center services. PPD opened its Athlone, Ireland, facility in March and also operates contact center services in Stockholm, Sweden.

Bulgaria's Rose Production Declines over 'Inadequate Subsidies'

In May, producers of the unique Bulgarian rose and rose oil for the cosmetics and chemical industry raised alarm over state subsidies.

They have complained that the government has adopted a hands-off policy with respect to the rose production sector, which leaves the rose growers at the mercy of the processing companies.

A kilogram of rose leaves is bought for BGN 1.2-1.3 from the farmers, who spend over BGN 100 per decare planted with roses. The state subsidy is BGN 22, which, according to the farmers, is suitable for the grain producers but not for the rose plantations, which are much smaller in size.

In 2010, Bulgarian rose oil refineries sold their rose oil to companies in France and the USA for about EUR 4 000 per kilogram; down from the EUR 5 000 the previous year.

Bulgarian rose oil is about BGN 1 000 more expensive than the oil produced in Turkey because of its unique qualities.

INDUSTRIAL ZONES AND CHINA

Bulgaria, China to Create Joint Company for Industrial Zone Project

After months of extensive talks, in September, the governments of Bulgaria and the Chinese province of Zhejiang a formal agreement to create a joint company to operate an industrial zone to be built in Bozhurishte nearby Sofia. This agreement was made during the official visit of Bulgarian Deputy Minister of Economy Evgeni Angelov to China and was signed by him and Zhejiang Province governor Lu Zushan.

The Bulgarian government came up with the Bozhurishte industrial/business zone project in the spring of 2010. In June, Minister of Economy Traicho Traikov made a visit to China, announcing afterwards that Chinese companies have a strong interest in investing in Bulgaria. The Bulgarian partner in the project will be the National Industrial Zones Company, while the Chinese partner is to be determined.

During talks in June, companies from the People's Republic of China have made clear their interest not only in building and managing an industrial zone in Bulgaria, but also in concessions of Bulgarian airports and ports.

Bulgarian-Chinese Industrial Zone to Host Bulgaria's 1st Hi-Tech Park

The future industrial zone in Bozhurishte near Sofia, which is expected to be developed as Bulgarian-Chinese project, will be the site of the first ever high-technology park in Bulgaria, CEO of "National Company Industrial Zones" Kiril Nikolov revealed in November.

As of November 2010, Bulgaria and its Chinese partners were refining a Master Plan for the establishment of the industrial zone. It will be located on a terrain of 191.4 hectares.

Nikolov said a certain part of the Bozhurishte zone will be managed jointly by the governments of Bulgaria and Zhejiang, while other sections of the development will be set aside to be offered directly to foreign companies.

In addition to being a major Bulgarian-Chinese project, the first of its scope, and to creating new jobs, however, the Bozhurishte Industrial Zone will have the potential to transform Bulgaria's economy in a new way- by hosting the first ever hi-tech park in the country.

According to Nikolov, the park is meant to be developed on a portion of the terrain in Bozhurishte. It will consist of a high-technology park, a business incubator and the inherent technology transfer office. The park itself will serve as a base for R&D work coming from outside firms, from research teams, or from universities.

The efforts of the Bulgarian Cabinet and Economy Ministry, the InvestBulgaria Agency, and the "National Company Industrial Zones" have been recognized by Nikolay Brankov, the Managing Director of Industrial Developments at SIENIT Holding, a construction company which developed five private industrial zone projects in Bulgaria the past decade.

DEFENSE INDUSTRY AND MILITARY-INDUSTRIAL COMPLEX

Govt Shows Will to Work Bulgaria's Military-Industrial Complex 

In April, Bulgaria's government set up an "Interdepartmental Council on the Issues of the Military Industrial Complex and the Mobilization Readiness," an institution co-chaired by Defense Minister Anyu Angelov and Economy Minister Traicho Traikov.

The Bulgarian Defense Ministry and Army are a negligible client as they purchase only 5% of the produce of the Bulgarian military industrial complex every year, explained Angelov. He and Economy Minister Traikov said that Bulgaria's annual arms exports amounted to BGN 140 M, while before 1989 it reached USD 1-1.5 B. Another comparison shows that 150 000 people worked at Bulgaria's military plants before 1989 while only about 15 000 do so today.

Bulgaria invests 1000 times less money than France and 150 times less than the Czech Republic in research and development activities in the military industry, or a total of BGN 2.5 M, which go to the Defense Institute of the Defense Ministry.

The Interdepartmental Council has considered collecting a fee from the Bulgarian arms producers in order to fund research and development. Economy Minister Traikov explained that within NATO Bulgaria has very intensive contacts with companies from the US military industrial complex which can be developed.

In September, Angelov and Traikov invited US companies to consider investments in Bulgarian military plants. During a visit to the USA Traikov invited Boeing to study the opportunities for the privatization of the ailing Bulgarian military industrial giant VMZ Sopot. He also invited Motorola to establish a partnership with the Bulgarian government in the field of communications.

Defense Minister Angelov said subsequently that he backed strongly any idea to "breathe live into the Bulgarian defense industry." He lauded Traikov's efforts to find a better place for individual segments of the Bulgarian defense industry in projects of both the United States of America and the European Defense Agency.

In July, the Bulgarian Defense Industry Association revealed the Bulgarian military-industrial complex invests between 10% and 30% of its combined profit annually in research and development activities. According to the latest report of the Bulgarian Defense Industry Association made public during its recent annual meeting this makes between BGN 2 M and BGN 6 M. The total turnover of the Bulgarian military plants in 2009 was a little over BGN 200 M.

The most competitive Bulgarian defense industry products internationally are small arms and light weapons, ammunition, communication systems, surveillance devices.

In November, representatives of the Bulgarian state and the business sector declared readiness to work for the integration of latest IT achievements with the country's armed forces and defense industry, and in October, Bulgarian defense industry companies met with representative of the NATO Maintenance and Supply Agency (NAMSA) in order to become more involved in procurement orders of the Alliance.

Bulgaria's Troubled VMZ Sopot Plant: Kremikovtzi of the Defense Industry

In February 2010, VMZ Sopot, the largest Bulgarian military plant, which is still state owned and in deep financial troubled fired workers who protested against delays of salaries.

The VMZ Sopot plant employs 3 700 workers. It is located in the town of Sopot in central Bulgaria, which is the birthplace of Bulgarian writer and poet Ivan Vazov. The plant was founded in 1936, and during the communist period was developed into a large-scale military industrial unit.

VMZ Sopot has been in a troubled financial condition in the last few years. In 2007, Bulgaria's Privatization Agency started to sell of the plant's assets in order to cover part of its debts; some of its assets were also sold at the beginning of 2009.

Over the years, several governments failed to decide on a strategy to privatize VMZ Sopot, and the Privatization Agency is said to be expecting a solution from the GERB government and the new Parliament dominated by them.

In May, Bulgarian authorities started investigating former managers of VMZ Sopot over suspected abuses that may have contributed to the dire financial situation of the plant. All information pertaining to the investigation is classified. The names of the former directors and senior managers of the military factory who are under investigation for abuses have not been revealed. VMZ Sopot, the largest military complex in Bulgaria, which is still state-owned, currently has total debts amounting to about BGN 100 M.

In April, the head of Bulgarian Privatization Agency Nikolov announced that in 2010 the Bulgarian state planned to initiate the privatization of VMZ Sopot. In his words, the struggling arms giant will take a while to be privatized because the respective strategy for the it had to be approved by the Parliament first.

US Army Orders Boost Bulgarian Machine Building Plant

In February, the Bulgarian "Dynamo" factory in the Southern city of Sliven announced it exports high-quality generators for the US.

The DEA 450 generator can function during extreme weather conditions and is effective in buses, fire trucks and military vehicles with high-power diesel engines and high electric consumption. The DEA 450 has received in 2007 a gold medal from the Plovdiv International Technology Fair.

Currently "Dynamo" sells over 90% of its production on international markets, of which 80% outside the EU – Russia and the US.

In the firs half of 2010, Dynamo saw a staggering 300% growth in its orders year-on-year.

The boost for the machine plant located in the eastern Bulgarian city of Sliven has come from orders for its "brushless alternator", type DEA 450, according to the company's statement.

The company has announced that the alternator has been a real breakthrough for the factory as it has become an integral part of the production of transport equipment for the US Army because of its advantages to analogical products.

CAR AND CAR PARTS MANUFACTURING

Bulgaria-Made Chinese Cars Hit EU Market in February 2011

In October 2010, it was announced that Chinese car maker Great Wall Motor Co and Bulgarian company Litex Motors will be rolling off their first vehicles in the plant in the town of Lovech, Northern Bulgaria, in February 2011.

Great Wall Motor Company, one of China's biggest automotive manufacturers, signed a joint venture (JV) deal with Bulgarian diversified holding company Litex Commerce in the presence of Chinese Vice President Xi Jinping and Bulgarian Prime Minister Boyko Borisov back in October 2009.

The plant will have an annual production capacity of 50 000 units and will assemble four different models – a sports utility vehicle (SUV), a pickup and two passenger car models, which are expected to be sold in European Union countries.

The total initial investment is around EUR 80 M, potentially reaching EUR 300 M if the project is successful. The cars are expected to be sold under the Great Wall badge, boosting the firm's output from around 400,000 at present.

The project is considered to be nothing short of a coup for Bulgaria, which does not currently produce any passenger vehicles, though it does have a modest but successful automotive components industry.

The plant will surely be positioned squarely towards export market and by the time production commences, the automobile market is expected to be experiencing a post-slump upswing.

This may also be the last chance for the revival of the local automobile industry after in mid 1990s Rover set up a joint venture with the Bulgarian Daru Group in Varna, which failed because of a weak market strategy, high prices, and a stronger competitor in the face of Skoda. The factory in Varna operated in 1995-1996, and produced a total of 2 200 Rover Maestro cars.

Bulgarian Plant Gets EUR 2 M Deal with Chinese Car Parts Maker

In June, the Ilinden factory located in Bulgaria's Pleven got an EUR 2 M contract for the purchase of machines and equipment with Chinese car parts manufacturer KSM Dongfang. The deal between the KSM Castings Dongfang located in Changchun in Northeastern China and the Bulgarian company from Pleven was signed in the presence of Bulgarian Economy Minister Traicho Traikov, who was on an official trip to China.

The KSM Castings Dongfang is part of the German-owned KSM Castings Group, and produces parts for Volkswagen, Audi, Peugeot Citroen. The Bulgarian factory Ilinden is owned by the US company Counter Pressure Casting INC through its subsidiary Contraco. Counter Pressure Casting INC also owns another Bulgarian plant in the town of Sevlievo.

Swiss Silcotex Opens Plant in Bulgaria Pernik

In January 2010, Swiss based company Silcotex opened a new plant in the Bulgarian city of Pernik. The company is specializing in the manufacturing of textile, plastic raw materials, automotive parts and components. The Pernik plant, valued at BGN 2,5 M, will produce liquid silicon gaskets used in automobile construction. According to company plans, about 50 people will be employed at the factory after completion of all construction stages.

UK Fund Set to Open Electric Car Plant in Bulgaria by 2011

In February and then again September, it was announced that UK investment fund Quorus Ventures will open Bulgaria's first factory for electric cars. The precise sum of the investment has not been specified but it is expected to be at least several million euro plus funding from EU programs.

The intention of Quorus Ventures to build an electric car plant in Bulgaria was announced by Bulgarian PM Boyko Borisov in February 2010 during his visit to the UK.

The British fund has picked Stara Zagora for its investment because of the availability of qualified laborers there.

The factory is going to produce two types of electric cars at first – family-type and sports-type. They will be able to run for 300 km with one charging of their batteries; the expenditures per 100 km will be about EUR 1.5, or BGN 3, which is about 10 times cheaper than the average cars of gas.

The first cars to be assembled in the new factory will be a four-seat ZCV-4 and a two-seat ZCV-2. Enev has said that at a later stage the plant could employ technologies and assembly lines developed by Bulgarian companies.The future factory will be producing about 10 000 electric cars annually, and will employ 300 people.

Quorus Ventures is reported to be moving its operations from Austria to Bulgaria because of the cheaper labor and better tax conditions.

Quorus Ventures is said to be focused on green technologies for machinery and waste disposal. The fund hopes that by 2020, 20% of all cars in Europe will be electric. The sales and distribution of the electric cars produced in Stara Zagora will be carried out by a commercial firm selected by Quorus Ventures.

Bulgaria's 1st Electric Light Truck Unveiled in Sofia

In May, Bulgarian producer of electric and LPG forklifts Di-Ven Ltd presented the first Bulgarian electric light truck.

Di-Ven Ltd, which is stationed in the Danube town of Lom, and is one of the founding members of the Bulgarian Electric Vehicles Industrial Cluster (EVIC), unveiled its electric truck project at the machine building fair "Mach Tech Expo 2010".

Electric transport car model ETK 021 from the PONY series is a light battery-driven truck – a highly maneuverable environment friendly vehicle designed to transport loads of up to 1 tone in an urban setting.

It is suitable for supplying stores and stands with goods, and transporting tools and materials by people offering services on the spot in larger cities.

The AGM battery of the electric light truck last for at least two years, and do not require additional maintenance. Their charging takes about 12 hours. The truck can run 50 km for the cost of 10 kW/h of electricity. The Di-Ven company has used explicitly Bulgarian-made parts for its manufacturing except for the electronic system, which accounts for about 10% of the production costs.

CONSTRUCTION MATERIALS AND CERAMICS

Bulgarian Company Lands Biggest Investment in Ukraine

In October, Bulgarian minerals producer Kaolin announced a USD 15 M investment to build a quartz enrichment plant in the Ukraine. This is estimated to be Bulgaria's largest investment to date in the Ukraine. Kaolin had acquired 51% of the Papernyanskiy Karyer Stekolnyh Peskov (PKSP) quartz sand extraction facilities nearby Oleshnya some 200 km away from capital Kyiv.

The new facility has been operating since the start of 2010, generating 1/5 of the company's output of quartz sand and employing 150 persons. Its product is pruchased by class producers from Ukraine, Moldova and southern Russia.

Ideal Standard International Unites Bulgarian Affiliates

In October, company executives announced that the two affiliates of Ideal Standard International that operate in the Bulgarian town of Sevlievo will be united in one company. Despite the change, the production process in the two factories, Ideal Standard Bulgaria and Ideal Standard Vidima, will continue as before. The merger was said to be finalized by December 31, 2010.

It is supposed to simplify the legal structure of Ideal Standard International. Ideal Standard Bulgaria produces ceramic sanitary fixtures and Ideal Standard Vidima has specialized in producing bathroom sanitary ware, fittings and accessories. The united company will operate under the name "Ideal Standard - Vidima."

It will keep the production of the two affiliates and will also carry out the sales and distributions of bathroom solutions in Bulgaria and other European countries. The merging of the two branches will strengthen the company's position on the market as one of the large Bulgarian employers with more than 3 200 employees. 

Italian Mapei Buys Ruse Production Plant Despite Crisis

In January 2010, the Milan-based international company Mapei announced an expansion in its Bulgarian operations with the purchase of a production plant in the northern city of Ruse.

The plant has been bought from Orgachim, a Bulgarian company specializing in the manufacture of varnishes and paints. The Ruse plant, more than 15 000 square meters in area, is for production of ceramic tile adhesives and thermal insulation systems.

As a result of this acquisition, Mapei Group currently owns 56 production plants in 25 countries around the world. Mapei has already had a presence in Bulgaria for a long time through several local distributors.

French Company Saint-Gobain Weber Builds 2nd Factory in Bulgaria 

In April, French company Saint-Gobain Weber started the construction of its second factory in Bulgaria, located near Izvorsko village, Aksakovo Municipality, close to Varna. The second factory to be built by Saint-Gobain Weber in Bulgaria will also be producing dry construction mixes.

Saint-Gobain Weber entered the Bulgarian market in 2001. In 2004, it opened its first storage facility, and in 2005 it acquired the Bulgarian maker of dry construction mixes Metakol stationed in the city of Ruse.

The first factory built by Saint-Gobain Weber in Bulgaria was inaugurated in April 2009 by then Bulgarian PM Sergey Stanishev. It is located near the town of Kostinbrod outside of the capital Sofia. The company's total investment in it was EUR 10 M, and it created 20 jobs.

MINING 

Bulgarian Miners, Environmentalists Tangled in Industrial Conflict

In August, a couple of hundred Bulgarian miners protested in downtown against what they see as a malicious campaign on part of an environmental organization against their employer.

The miners work for Kaolin Jsc, a company dealing with the extraction of construction materials such as china clay (kaolinite), which has been accused by a environmental political movement called Ecoglasnost of destroying the environment when extracting limestone from a deposit near the southern Bulgarian town of Merichleri.

Kaolin Jsc is owned by Alpha Finance Holding whose major shareholder is businessman Ivo Prokopiev, the majority shareholder in Economedia, the publisher of the Dnevnik Daily and the Capital Weekly.

The Ecoglasnost political club split off from the National Movement Ecoglasnost backing the rightist Union of Democratic Forces in the late 1990s, and declared itself a leftist organization. The former leader of the leftist Ecoglasnost, Stefan Gaytandzhiev, subsequently served as an MP from the Socialist-dominated Coalition for Bulgaria.

As early as the spring of 2010, Ecoglasnost accused Kaolin Jsc of tax evasion of BGN 20 M, and of establishing an artificial monopoly in the sector. Over the past few weeks, it started to accuse the company of failing to observe environmental regulation in the Vulkan Quarry near Merichleri, Haskovo District.

The miners who protested in downtown Sofia Tuesday claimed that the allegations of the people they described as fake environmentalists were aimed at discrediting their company in order to achieve specific business and political goals.

Dundee Abandons Cyanide Gold Mining in Bulgaria over 'Public Concerns'

In June, Toronto-based mining company Dundee Precious Metals abandoned plans for a gold mine near Bulgaria's Krumovgrad using cyanide technology. Balkan Minerals and Mining, a local subsidiary of Dundee Precious Metals, asked the Bulgarian Environment Ministry to terminate the procedure for certifying gold extraction using cyanide near Krumovgrad, and has submitted a new project for gold mining without the use of cyanide.

The news comes a few months after a Bulgarian court ruled against the cyanide gold extraction at the other mine operated by Dundee's other subsidiary in the country, Chelopech Mining. The mine is located near the village of Chelopech.

The company plans to process the gold concentrate extracted in Bulgaria outside the country.

Dundee Precious Metals announced in January 2010 that it has abandoned plans to develop a plant in Bulgaria, buying a smelter in Namibia instead.

Bulgaria's Economy Ministry confirmed that the company has informed them of the acquisition of a plant in Namibia and the freezing of its plans to build a metallurgy plant near Chelopech, about 60km east of Sofia, using cyanide to extract the gold.

The decision came in the wake of a ruling of the supreme Bulgarian court from the end of last year, which revoked a 2008 environmental impact assessment resolution, which gave the green light to its gold and copper mine in Chelopech.

Dundee's new project about the Krumovgrad mine does not provide for the previously planned facility for extraction using cyanide, and will occupy a smaller area of the Ada Tepe deposit near the southern Bulgarian town. The project provides of a USD 100 M investment, which is less than the previous plans for investing USD 120-150 M including a cyanide installation.

The Krumovgrad mine will produce about 800 000-1 million tones of gold concentrate per year.

Dundee Precious Metals is a Toronto-based Canadian company with two Bulgarian subsidiaries-Chelopech Mining EAD, which is developing a gold and copper deposit at the town of Chelopech in western Bulgaria, and Balkan Mineral and Mining EAD, which is surveying a concession area near Krumovgrad in southern Bulgaria.

In the fall of 2009, people from another Bulgarian mountain town, Chepelare, raised their concerns over a potential Dundee mining project in the area because of the cyanide extraction technology.

In April 2010, Dundee announced the discovery of two new high-grade targets of gold deposits near the Chelopech Mine in Bulgaria.

EurOmax Starts Diamond Drilling Program in Bulgaria

In May,  the Canada-based mining company EurOmax started a diamond drilling program at its Breznik Gold Project in Bulgaria.

If successful, the drilling will double the strike length of mineralization at the EurOmax project in Breznik to the west of Sofia, the company announced adding that once the drilling is completed it intends to apply for a Commercial Discovery Certificate under Bulgarian mining law.

EurOmax Resources Limited is a Toronto Venture Exchange Listed company maintaining portfolio of gold and base exploration projects in Southeastern Europe.

In 2004, the Bulgarian government issued two licenses to the company, the 98 square km Breznik permit and the Rakitovo permit which covers 83 square km.

WASTE-PROCESSING

In November, the European Commission agreed to finance the initial stages of the construction of Sofia's long-overdue waste treatment plant.

Prime Minister, Boyko Borisov, received a letter from the EC President, Jose Manuel Barroso, notifying him the funding has been approved, after Bulgaria provided the explanations requested by the EC experts. The money will be used for the main waste depot and the compost equipment, valued together at EUR 50 M. The EC President points out the Commission would be willing to lift relevant proceedings against Bulgaria if construction works, related to infrastructure, begin quickly, but adds parts of the project must still be revised.

In September, the Bulgarian Supreme Administrative Court (VAS) ruled to give final approval of the order of the Mayor of Sofia, Yordanka Fandakova, for the selection of the winning bidder to build the city's waste processing plant.

With this rule the Sofia City Hall can now sign the contract with the consortim between the Bulgarian "Stanilov" company and the German "Heilit", who offered BGN 209 M, winning the tender earlier in 2010, and was afterwards attacked with appeals by the rejected competitors.

VAS rejected the complaints of the other bidders - the Bulgarian companies "Balkanstroi", "Valmex," the German "Hochtief," the Greek "Helector,"and the Austrian "Alpine Bau," who are among the seven appealing the public tender procedure and the decision of the Competition Protection Commission that they did not meet the requirements for having experience in construction of waste treatment plants and did not prove to have key experts.

The magistrates ruled the Commission acted accordingly in confirming the City Hall ranking of the bidders and selecting "Stanilov-Heilit" as the contractor for the project.

BGN 40 M Invested in Bulgaria's 1st Appliances Recycle Plant

In June, the first Bulgarian factory for the recycling of old electric appliances and equipment, the largest and most modern of its kind in Eastern Europe, was opened in the town of Novi Iskar near Sofia.

The Bulgarian company Nadin Jsc is the owner and operator of the new plant, and invested BGN 40 M in its construction creating 150 news jobs. The factory is the largest of its type in Eastern Europe and uses German technology allowing the complete recycling of used electric appliances in one building.

Glass Recycling Plant to Open near Sofia

In July, Bulgaria's Environment Minister Nona Karadzhova broke the ground for the construction of a glass recycling plant in the village of Ravno Pole near the capital Sofia.

The Ecopack, a joint stock company that does not distribute its profit formed in 2004 by 18 Bulgarian and foreign firms, is going to invest BGN 3.8 M in the glass recycling facility.

The plant is going to use empty bottles from around Bulgaria; the recycled glass material will be provided to two glass producing plants. The future factory will have a capacity of 50 000 tonnes of bottles annually.

CLOTHES, SHOES

Bulgaria's Apparel Industry Sees Light at Tunnel's End

In October, data showed Bulgaria's apparel and textile producers registered a 20% growth of its sales in the first nine months of 2010 year-on-year. According to the Bulgarian Association of Apparel and Textile Producers and Exporters, even with this growth, the manufacturing of apparel and textile in Bulgaria is much behind its pre-crisis levels. Mariana Manolova, head of the Association, however, said that the growth of sales is a "breath of fresh air" for the industry, and that the plants will probably start hiring new workers.

The textile and apparel production was one of the industries in Bulgaria that laid off a large number of workers as the economic crisis hit in the last quarter of 2008. The Bulgarian manufacturers produce clothes in the medium and high price range. About 90% of the Bulgarian apparel production is exported to the rest of the EU.

In September, the VP of the Bulgarian Association of Apparel and Textile Producers and Exporters, Bertram Rollmann said the textile industry in the country grew by 18-22% in the previous two months, and that the Bulgarian companies were overwhelmed with orders and even had to turn down some of them due to lack of capacity.

Crisis Shatters Bulgaria's Shoe-making Industry

In September, data of the "Branch Union of Leather, Fur, Footwear, and Haberdashery Industry in Bulgaria" showed the number of Bulgarian firms producing shoes halved as a result of the economic crisis. The Branch Union, which has 50 members, does not know the precise number of shoe-making companies in Bulgaria, but has estimated that about 200 are the active producers at the moment, compared with twice as many before the crisis hit in 2008. The Bulgarian shoe-makers usually manufacture with materials provided by their contractors, and the produce goes for export. Even amidst the crisis, Bulgaria remains the fourth largest exporter of shoes to Italy after Portugal, Spain, and Romania.

LUMBER AND FURNITURE

Bulgaria's Lumber Industry Picks Up, Furniture Lags Behind

In October, Georgi Kostov, Deputy Agriculture Minister and head of the State Forestry Agency, said Bulgaria's state budget revenues from the lumber industry in the state-owned forest plots will amount to BGN 60 M in 2010. Bulgaria extracts about 4 million cubic meters of lumber per year, and most of that goes for exports to Turkey and Iraq which are seeing a boom of construction; at the same time, the Bulgarian furniture industry takes up only 1 million cubic meters of timber annually, according to the Bulgarian Chamber for Woodworking and Furniture Industries. Yet, in the past 2-3 months, the volume of furniture production has started to increase slightly, according to Kalin Simeonov, Chair of the Chamber.

Bulgaria's furniture production is expected to slump by 10% in 2010, which is an improvement considering the shock decline of 20% in 2009. The major reason for that is the reduced domestic consumption.

After reaching a peak of BGN 170 M in 2008, Bulgaria's export of furniture collapsed down to BGN 120 M in 2009. The export of lumber dropped from BGN 300 M down to BGN 250 M, according to data of the Bulgarian Chamber of the Wood-Processing and Furniture Industry.

In the first four months of 2010, Bulgaria's timber industry grew by 50% in the first four months of 2010 year-on-year.

Bulgarian Mattresses Producer TED-BED Sets Out to Conquer EU Market

In July, Bulgarian manufacturer of mattresses TED-BED Jsc said is aspiring to become a leader on the European market in the medium run. TED-BED Jsc invested about EUR 11 M in its manufacturing plant near Plovdiv, which was opened in 2009, and is located on an area of 24 000 square meters.

The TED factory currently produces about 1 500 mattresses daily but has the capacity to increase its output 3-4 times. The company currently employs about 250 workers. The size and capacity of the plant rank it among the top three mattresses factories in Europe. TED-BED Jsc at present has a share of about 58% of the Bulgarian market of mattresses but has clearly embarked upon an ambitious course of expanding its presence and sales abroad. Currently, only about 30% of its produce goes for exports.

TOBACCO

Tobacco Companies Back Bulgaria in Crackdown on Cigarette Black Market

In November, the general managers of Bulgartabac Holding, Philip Morris Bulgaria, British American Tobacco Bulgaria, Japan Tobacco International Bulgaria and Imperial Tobacco Bulgaria  of leading international tobacco companies - Bulgartabac Holding, Philip Morris, British American Tobacco, Japan Tobacco International and Imperial Tobacco expressed their commitment to backing the efforts of the Bulgarian government to beat down illicit cigarette trade by meeting with Bulgaria's two Deputy Pms – Interior Minister Tsvetanov and Finance Minister Djankov.

Bulgaria is among the top EU countries in terms of illicit cigarette consumption, with approximately 1 out of 3 cigarettes coming from the black market without generating the equivalent excise and VAT taxes. As a result, despite the big excise increase on cigarettes in 2010, official data of the Ministry of Finance indicates that the loss of revenues only from unpaid excise will be BGN 700 M.

Bulgaria's State Tobacco Company Registers Huge Profit Increase

In August, Bulgartabac, Bulgaria's state tobacco company, registered a 165.93% increase in net profit for the first half of 2010 in comparison with the same period last year. Bulgartabac's financial statements attribute that to considerable increase in exports and optimization of costs. Net profits for the first half of 2010 amount to BGN 7.5 M, with more than five-sixths of the production going for exports. In 2009 Bulgartabac offloaded itself from two cigarette factories, in Plovdiv and Stara Zagora, and retains two more production facilities, in Blagoevgrad and Sofia. 

Bulgaria Failed to Privatize Tobacco Monopoly in 2010

In spite of declarations in April that Bulgaria's Privatization Agency hoped to complete the sale of state-owned cigarette monopoly Bulgartabac in 2010, no such deal went through by the end of December.

In the spring, the head of the Privatization Agency Nikolov explained that the privatization procedure for Bulgartabac had reached a phase in which the state is preparing its sale together with the consultant it picked in February, Citygroup Global Markets Ltd.

Two of the less profitable plants of Bulgartabac holding – in the cities of Plovdiv and Stara Zagora – were sold in 2009 through the Sofia Stock Exchange; the holding still owns the two larger and more consolidated factories in Sofia and Blagoevgrad as well as a number of commercial brands.

WINES, FOOD

Bulgarian Wine Industry Attacks Brazil's Market

In October, Bulgaria's Agriculture Ministry announced its expectations for at least 10% increase of the wine export in 2010 despite the forecasts for 30% decrease of grapes harvest. Bulgaria has entered the Brazilian red wine market for the first time. Meanwhile, Chile and Argentina, who are Bulgaria's major competitors at the Russian wine market, registered a 70% decrease of the harvest.

The ministry stated that Bulgaria has maintained its good positions at the Polish, German and Nordic markets as well.

Bulgaria's Food Safety Agency to Control 647 000 Outlets

In 2010, the Agriculture Ministry prepared the launch of the Bulgarian Food Safety Agency, which will begin operating in early 2011, and will control about 647,000 outlets.

The new Food Safety Agency will merge the National Veterinary Service, National Grain and Grain Products Service, National Plant Protection Service and the section of the public health body RIOKOZ that is responsible for the food safety.

Carlsberg Becomes Number 2 on Bulgaria's Beer Market

In May, Carlsberg Bulgaria announced it had become second on the Bulgarian beer market, after Zagorka AD, and ahead of Kamenitza AD. Carlsberg Bulgaria with two breweries, in the cities of Shumen and Blagevgrad, has 30% of beer market in the country. The top 3 companies together have a 91% share of the market.

In the first quarter of 2010, the leading brand of Carlsberg Bulgaria – Shumensko reached a 19% market share while the other brands, particularly Tuborg and Pirinsko, also increased their sales.

Carlsberg Bulgaria is one of the top investors in the Shumen Region and in Bulgaria. In 2009 the company invested BGN 22 M in the Shumen and the Blagoevgrad breweries and plans to invest another BGN 15 M in 2010 of which BGN 5 M will be in Shumen, rounding up the total investments there since 2004 to BGN 75 M.

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