Serbia asks for exemption from new EU steel import cap

BELGRADE, Jan 15 (Reuters) - Serbia said on Tuesday it had asked the European Commission to exempt it from new steel import quotas to ensure continued full production by the country’s Chinese-owned steel mill, a key driver of its economic growth.

HBIS Group Serbia, a unit of Chinese steelmaker Hesteel , purchased Serbia’s sole steel mill Zelezara Smederevo in 2016. Its maximum output is set at 2.2 million tons of steel annually.

In 2018 Zelezara Smederevo was Serbia’s second best single exporter for value with 638.3 million euros ($729.32 million), behind the local unit of Italy’s Fiat carmaker that exported 654.7 million euros.

EU member states are to vote on Wednesday to approve a scheme to limit imports of steel into the bloc following U.S. President Donald Trump’s imposition of tariffs on steel and aluminium entering the United States.

This would impose an effective cap on steel imports for three years to counter concerns of EU producers that European markets could be flooded by steel products that are no longer being imported into the United States.

But such a move could jeopardise exports from the Smederevo plant, Vucic said in an interview with pro-government Pink TV.

He said he had asked European Commission President Jean-Claude Juncker and German Chancellor Angela Merkel to approve quotas sufficient for the Smederevo plant to maintain full production. Serbia is a EU membership candidate country.

“If you exempted Norway and Cameroon, exempt Serbia as well...Allow small Serbia to survive,” Vucic said, adding that the Balkan republic’s steel output accounted for only 1.5 percent of European production.

The main exporters of steel to the EU are China, India, Russia, South Korea, Turkey and Ukraine.

Vucic also said he had sent Prime Minister Ana Brnabic to Brussels before the vote to present Serbia’s case.

China has invested more than $1 billion in Serbia, mostly in the form of soft loans to finance highway and energy projects, as part of its Belt and Road debt-for-development initiative to open new foreign trade links.

Last August, China’s Zijin Mining acquired Serbia’s sole copper complex RTB Bor, pledging to invest $1.26 billion in return for a 63 percent stake. ($1 = 0.8752 euros) (Reporting by Aleksandar Vasovic Editing by Mark Heinrich)