.gif?width=220&height=200&mediaprotectionhash=b13da841472e6e7ed500ee35df2a350aaf53d75246118b33ea2095cc7e9a3fc4&ext=.gif)
Serbia to Idle Loss-Making Steel Mill
06/25/2012 - Serbia plans to halt production at the loss-making Smederevo steel mill next month and send most of its 5500 workforce home with reduced salaries until after the company's sale expected in September.
Serbia plans to halt production at the loss-making Smederevo steel mill next month and send most of its 5500 workforce home with reduced salaries until after the company's sale expected in September, a government official said on Monday.
The government last December bought back the loss-making plant from U. S. Steel for a nominal US$1 to avert closure.
"One furnace was idled by the U. S. Steel before it left, we will likely have to idle the second one in July and the management will also likely halt the roll mill to cut losses," a government official who asked not to be named told Reuters.
The Belgrade-based Vecernje Novosti daily also quoted Predrag Umicevic, the plant's chairman of the board as saying that the move is aimed at cutting losses amidst weak demand and that about 5000 workers will be sent home with wages cut to 60%.
Belgrade offered the plant for sale in April and said that Luxembourg-based United Pilsen SA, Ukraine's Donetsksteel Group and the Russian Ural Mining and Metalurgical Co were considering a bid.
The Serbian government has extended the deadline for bids twice, last time on 11 June, saying it was prompted to do so by the participants in the tender. It set a new deadline for 10 September.
The government official said that the Smederevo steel mill may not be restarted until the potential sale to a strategic partner in September.
U.S. Steel bought the then-bankrupt Smederevo's Sartid steel mill in 2003 for US$33 million, decided to leave the Balkan country as the plant has been running well below annual capacity of 2.4 million tonnes for five years.
The sale of the Smederevo steel mill would ease pressure on Serbia's budget after the International Monetary Fund froze a €1 billion (US$1.25 billion) standby deal with the European Union candidate country in February over its inflated spending and public debt.
But the failure to sell the mill would put an additional burden on the new Serbian government that should be formed following inconclusive parliamentary vote in May.
Former President Boris Tadic's pro-Western Democrats and the Socialists, led by outgoing interior minister Ivica Dacic, failed again last week to agree on a renewed coalition that will have to fight economic downturn and unemployment of more than 24%.
