February 28, 2013 / 4:50 PM / 5 years ago

Serbia mulls Plan B for steel mill after deadline expires

* Top officials to discuss plan on Friday

* Finmin says tender will not be extended again

* State bought back loss-making mill in 2011 from U.S. Steel

By Aleksandar Vasovic

BELGRADE, Feb 28 (Reuters) - Serbia’s finance minister will announce a “Plan B” for the country’s sole steel mill, he was quoted saying on Thursday after the latest deadline for its sale passed with no offers.

The Serbian state bought the loss-making Zelezara Smederevo mill back 45 km east of Belgrade from U.S. Steel in late 2011 for $1 to avert its closure and the loss of 5,500 jobs.

The government had extended the sale deadline three times since October last year, hoping to lure an offer from Russian tank and railcar manufacturer Uralvagonzavod (UVZ). The final deadline expired at 5 p.m. (1600 GMT) on Thursday.

Finance Minister Mladjan Dinkic said he would announce a Plan B for the mill on Friday but gave no details. “The goal is to resolve the problems of Zelezara and to secure the survival of Smederevo,” the Beta news agency quoted Dinkic as saying, referring to the town where it is based.

He said he would discuss the plan with Prime Minister Ivica Dacic and President Tomislav Nikolic before going to the mill’s unions and management.

U.S. Steel paid $33 million for the plant in 2003 in Serbia’s first major privatisation deal following the fall of late strongman leader Slobodan Milosevic in 2000. But the plant ran well below annual capacity of 2.4 million tonnes for years.

The state halted production last July and sent most of the workforce home on reduced pay. One of two unions representing workers has announced a protest for Friday.

The government wants to offload the mill, and a number of other loss-making assets, to reduce the burden on the state budget, which ran a shortfall of some 6 percent of national output last year. It is targeting a budget deficit of 3.6 percent in 2013.

Last week, Russia’s Interfax news agency quoted UVZ chief Oleg Siyenko as saying his company had no immediate solution to Smederevo but a decision could be taken in March.

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