Contract signed with new Zelezara management

Contract signed with new Zelezara management

The Zelezara steel mill will become lucrative, salaries will increase and safe jobs will be provided for employees, Vucic told reporters after the signing of the management contract with Dutch company HPK Engineering BV.

The most important point for us is embodied in production increase, Vucic said and added that the output in the plant totalled 65,000 tons in February, the expected output for March adds up to over 80,000 tons and the expected production in April is set at 95,000 tons of steel.

This will significantly impact GDP growth, he said and added that Serbia's 2016 GDP will be higher by at least 0.8 percent than this year's figure.

"This will have the best possible influence on the Serbian economy as a whole," Vucic said.

The contract with HPK Engineering BV as the new management of Zelezara Smederevo was signed in Smederevo on Saturday.

The contract was signed by Serbian Minister of Economy Zeljko Sertic, Executive Director Bojan Bojkovic on behalf of Zelezara steel mill and Dutch company HPK Engineering representative Peter Kamaras, and the signing ceremony was attended by Vucic.

The management contract was closed for the duration of three years with the possibility of interruption in case an adequate partner for Zelezara purchase is found.

The ownership over Zelezara Smederevo was transferred back to the Republic of Serbia in January 2012 when the previous owner, U.S. Steel, decided to sell the steel mill for USD 1 after nine years of operation due to the mill's losses caused by the drop of the price of steel on the global market.

Zelezara Smederevo employs around 5,000 people and currently has an annual output of around 350,000 tons of steel, although its total annual production capacities add up to around 2.2 million tons of steel.

"30 percent at best"

Head of Zelezara Smederevo Bojan Bojkovic has said that the steel company's profit will be divided with HPK Engineering, "which will take no more than 30 percent."

The profit of the Dutch company, which took over the management of Zelezara Smederevo on Saturday, will depend on the revenue, and it could be 20-25 percent, with 30 as the maximum, while the rest would go to the Serbian government, he told Tanjug.

Bjokovic hopes that production and export will go up with the new management.

Zelezara is already making 12,000-15,000 tonnes of steel per month for the Serbian market and is expected to make more than 80,000 tonnes of finished product in March and another 90,000-95,000 tons in April, he stated.

Average monthly production in the company was 50,000-55,000 tons of finished product until recently, he pointed out.