UPDATE 2-Serbia Buys Steel Plant to Save Jobs before Poll-Shanghai Metals Market

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UPDATE 2-Serbia Buys Steel Plant to Save Jobs before Poll

Industry News 03:37:32PM Jan 29, 2012 Source:SMM

BELGRADE, Jan 27 (Reuters) - The Serbian government will buy back U.S. Steel Corp's loss-making Serbian plant for a nominal one U.S. dollar to avert major job losses and preserve a key exporter ahead of elections in May.

"We have agreed to buy it back for $1," Prime Minister Mirko Cvetkovic told a news conference on Friday. "U.S. Steel is leaving Serbia and the reason for that is the economic crisis."

U.S. Steel bought the then bankrupt Sartid steel mill from the central city of Smederevo in 2003 for $33 million, but the plant has been running well below annual capacity of 2.4 million tonnes for the past five years.

Cvetkovic said Serbia, struggling with the spillover of the euro zone crisis, had no plans to keep the plant.

"We have no intention to remain owners of the steel mill on a long run. We will be seeking a strategic partner," he said.

To meet its IMF-agreed budget deficit for 2012, set at 4.25 percent of gross domestic product as part of a 1-billion-euro standby deal, Serbia needs to find investors.

But over the past decade it had failed to sell major state-run enterprises including the RTB Bor copper mine and smelter, the JAT Airways flag carrier and Galenika Pharmaceuticals.

The govermment has repeatedly issued guarantees to these companies to ensure their survival.

Belgrade this week formed a special working group to find a solution for the steel plant, worth about $35 million in exports in 2010.

The government, facing an election by May, has been battling for months to avert the closure of the plant, which accounts for 14 percent of Serbia's total exports and is a workplace for about 5,500 people. Official unemployment in the 7.3 million-strong Serbia stands at 23.7 percent.

Cvetkovic pledged there will be no job losses at the plant. "No worker will end up in the street," he said. "With this the government has demonstrated its social responsibility."

In October last year, U.S. Steel announced its steel-making plants in Slovakia and Serbia had accumulated a combined loss of $50 million in the first three quarters of 2011.

Earlier this month, U.S. Steel put the majority of the workforce at the Serbian unit on a four-day working week to cut costs, having idled one its two blast furnaces last year.

"The steel mill has no debts and bank loans," Cvetkovic said. "With this we have acquired equipment and assets worth a total of 100 million euros."

He said the formal agreement between the government and U.S. Steel would be signed on Jan. 31.
 

Key Words:  steel 

UPDATE 2-Serbia Buys Steel Plant to Save Jobs before Poll

Industry News 03:37:32PM Jan 29, 2012 Source:SMM

BELGRADE, Jan 27 (Reuters) - The Serbian government will buy back U.S. Steel Corp's loss-making Serbian plant for a nominal one U.S. dollar to avert major job losses and preserve a key exporter ahead of elections in May.

"We have agreed to buy it back for $1," Prime Minister Mirko Cvetkovic told a news conference on Friday. "U.S. Steel is leaving Serbia and the reason for that is the economic crisis."

U.S. Steel bought the then bankrupt Sartid steel mill from the central city of Smederevo in 2003 for $33 million, but the plant has been running well below annual capacity of 2.4 million tonnes for the past five years.

Cvetkovic said Serbia, struggling with the spillover of the euro zone crisis, had no plans to keep the plant.

"We have no intention to remain owners of the steel mill on a long run. We will be seeking a strategic partner," he said.

To meet its IMF-agreed budget deficit for 2012, set at 4.25 percent of gross domestic product as part of a 1-billion-euro standby deal, Serbia needs to find investors.

But over the past decade it had failed to sell major state-run enterprises including the RTB Bor copper mine and smelter, the JAT Airways flag carrier and Galenika Pharmaceuticals.

The govermment has repeatedly issued guarantees to these companies to ensure their survival.

Belgrade this week formed a special working group to find a solution for the steel plant, worth about $35 million in exports in 2010.

The government, facing an election by May, has been battling for months to avert the closure of the plant, which accounts for 14 percent of Serbia's total exports and is a workplace for about 5,500 people. Official unemployment in the 7.3 million-strong Serbia stands at 23.7 percent.

Cvetkovic pledged there will be no job losses at the plant. "No worker will end up in the street," he said. "With this the government has demonstrated its social responsibility."

In October last year, U.S. Steel announced its steel-making plants in Slovakia and Serbia had accumulated a combined loss of $50 million in the first three quarters of 2011.

Earlier this month, U.S. Steel put the majority of the workforce at the Serbian unit on a four-day working week to cut costs, having idled one its two blast furnaces last year.

"The steel mill has no debts and bank loans," Cvetkovic said. "With this we have acquired equipment and assets worth a total of 100 million euros."

He said the formal agreement between the government and U.S. Steel would be signed on Jan. 31.
 

Key Words:  steel