Government rejects U.S. company's offer for steel mill

Government rejects U.S. company's offer for steel mill

BELGRADE -- The Serbian government on Tuesday decided against selling an 80-percent stake in the Smederevo-based Zelezara steel mill to the U.S. company Esmark.

This was announced by Prime Minister Aleksanadar Vucic during a news conference.

He said the decision was made at the recommendation of the privatization adviser KPMG and the Commission for the Model of Realizing a Strategic Partnership.

Vucic explained that Esmark failed to provide guarantees that Serbia's working capital would be preserved and that the factory would not be shut down - "that all raw materials would not be spent and the factory then abandoned with the explanation that the market was not good."

"Millions of dollars" would be lost in that way and that is the main reason why there has been no agreement, he added. Vucic also revealed that he had "pleaded" with Esmark's owner to allow Serbia the right to control the usage of raw materials and purchase and sale of steel during the first nine months after the sale.

But the decision today "does not mean the end of Zelezara," Vucic said.

The prime minister said that a public call would be announced on Monday for a management contract because "we never knew how to earn money, nobody in Serbia ever knew that."

"I expect that by the end of March, Zelezara will start working with increased capacity and that the second (blast) furnace will be operational by the end of the year," Vucic concluded.

The Privatization Agency issued an invitation to tender to select a strategic partner for Zelezara Smederevo on December 5, 2014. A total of three bids arrived, only that submitted by Esmark Inc. being valid.

The...