EU asked for more time as steel plant talks continue

EU asked for more time as steel plant talks continue

"The European Commission (EC) has received documentation from the government of Serbia last week. Now it is up to European Commission and the commission for state aid to analyze these documents," Head of EU Delegation to Serbia Michael Davenport told the Beta agency.

Davenport pointed out that this was "an important thing" and that he was glad that the Serbian government continues negotiations with Esmark.

"It is very important that everything be in accordance with existing obligations and to come to a successful conclusion of these negotiations in the interest of all," said he.

The negotiations between the government and Esmark on added capitalization of Zelezara should continue on Monday evening.

As announced by Prime Minister Aleksandar Vucic, Esmark owner James Bouchard will arrive in Belgrade to take part in the negotiations, that will also include Serbian ministers of finance and economy Dusan Vujovic and Zeljko Sertic.

The talks began on January 27 but have not been completed over a disputed USD 15 to 20 million guarantee the American company should provide to confirm that production in the Smederevo plant will continue after it has been privatized.

Esmark is also asked not to reduce the workforce for at least the next three years, and to increase the steel production to 1.5 million tons.

It was announced earlier that the sale would be completed by February, when according to EU regulations the deadline expires for members or candidates to provide state assistance to the steel industry.

Therefore, the government of Serbia asked the EU to extend this deadline so it can complete negotiations with Esmark, and now hopes that will happen within 10 to 15 days. If there is no agreement, the steelmaker will find it difficult to avoid bankruptcy.

Esmark was the only bidder to acquire a 80.01 percent stake in Zelezara in a tender launched on January 9. In case it reaches agreement with the U.S. company, the government will own the remaining stock.

Initially bought by U.S. Steel in 2003, then under the name Sartid, Zelezara once again became the property of the state in February 2012 when it was bought back for one U.S. dollar, after the U.S. company withdrew because of losses.

Under the terms of the January tender, state creditors will write off the company's debt as of December 31, 2013. Zelezara employs about 5,000 people, currently produces between 340,000 and 350,000 tons of steel, while its production capacity is about 2.2 million tons.