"Good management will keep Zelezara running"

"Good management will keep Zelezara running"

The negotiations have failed

, and all elements of the contract for Plan B, which implies professional management for the Smederevo-based steelworks, will be prepared in the next few days, said Sertic.

"I am certain that with good management and good will we will keep Zelezara running for years,“ the minister said, noting that the talks with US-based steel producer and distributor Esmark, whose conditions for the purchase of Zelezara were not accepted, were very difficult.

Sertic added that the talks were held in coordination with the IMF and the EU, and that the government is in constant contact with these institutions.

"They think that Plan B is acceptable," Sertic said.

The negotiations with Esmark started on January 27. The company was the sole valid bidder for 80.01 percent stake in Zelezara in the tender opened on January 9.

Zelezara employs some 5,000 people and currently produces 340,000 to 350,000 tons of steel per year. When operating at full capacity, the annual output could reach 2.2 million tons.

"Previous conditions"

Chairman and Chief Executive Officer of Esmark Europe BV James Bouchard expressed disappointment on Wednesday over the failure of the negotiations on takeover of Zelezara Smederevo Steel Works and attributed it to a change in previously agreed conditions.

In a release filed to Tanjug, Bouchard noted that his company could not accept a revised proposal from the Republic of Serbia that changed the financial terms and provisions, but he noted that the company is still willing to take over the Smederevo steel mill on previously agreed conditions.

"We are extremely disappointed we could not reach a definitive agreement with the Republic of Serbia for the sale and purchase of Zelezara Smederevo Steel Works, especially since we reached an agreement on the key terms of the transaction following the successful conclusion of negotiations last Thursday and Friday in Pittsburgh,” Bouchard said in the release.

“We negotiated in good faith throughout the entire tender process, maintained a fair and consistent position throughout more than ten months of due diligence and talks, delivered a sound and comprehensive business plan, and put in place a world-class management team to revitalize the steel mill and make a meaningful and lasting contribution to the Serbian economy,” states the release.

“Esmark Europe's detailed tender offer and business plan also paved the way for the company to successfully negotiate a three-year labour agreement that would have provided all 5,300 steelworkers with a 25 percent wage increase this year and a ten percent increase in 2016,” Bouchard said.

“In addition, Esmark Europe's offer committed USD 130 million in capital expenditures, a USD 200 million working capital credit facility, and USD 400 million in maintenance, spare parts and capital required to manage and maintain a two blast furnace operation,” the release reads.

“Esmark Europe BV remains ready to move forward with the transaction on the terms agreed to last Thursday and Friday in Pittsburgh,” Bouchard said in the release.

“We do wish to extend our sincere thanks to Republic of Serbia Prime Minister Aleksandar Vucic and his Ministers, U.S. Ambassador to Serbia Michael Kirby, and the dedicated steelworkers and their union leadership for all their efforts during this process and wish them well as they move forward,” Esmark Europe BV chairman said.

The Serbian government decided Tuesday not to sign a contract with the US steel producer and distributor Esmark, after being advised to do so by the privatization advisor (KPMG) and the commission for the implementation of a strategic partnership model for the privatization of Zelezara Smederevo.