Reuters reported that Serbia plans to halt production at the loss-making Smederevo steel mill next month and to send most of its 5,500 workforce home with reduced salaries until after the company's sale expected in September 2012.

The government in December 2011 bought back the loss making plant from US Steel for a nominal USD 1 to avert closure.

A government official who asked not to be named told Reuters that "One furnace was idled by the US Steel before it left, we will likely have to idle the second one in July 2012 and the management will also likely halt the roll mill to cut losses."

The Belgrade based Vecernje Novosti daily also quoted Predrag Umicevic, the plant's chairman of the assembly of shareholders as saying that the move is aimed at cutting losses amidst weak demand and that about 5,000 workers will be sent home with wages cut to 60%.

Serbia's outgoing economy minister Mr Nebojsa Ciric said that the government hoped it would find a strategic partner or a consortium of partners to maintain operations of the steel mill. He added that "The situation in the plant is not easy, it operates with a loss but we hope that a strategic partner could secure cheaper raw materials or better placement of its products."

Belgrade offered the plant for sale in April 2012 and said 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, the last time on June 11th 2012, saying it was prompted to do so by the participants in the tender. It set a new deadline for September 10th 2012.

The government official said the Smederevo steel mill may not be restarted until the potential sale to a strategic partner in September 2012.

Source - Reuters

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