Reuters reported that the Serbian government has said that it is looking east to quickly offload its sole steel plant, a major employer and exporter it bought back from US Steel for USD 1 after years of underperformance.

Signing the buyback deal, Prime Minister Mr Mirko Cvetkovic said that the government hoped to find a buyer swiftly, amid concern over the strain the plant will place on the budget of the struggling Balkan country.

He added that "We have no plans to run it long term. Investors could come from Ukraine, Russia or even the far East."

Mr Cvetkovic said that Serbia would finance production and wages from the budget until the sale. He added that "There will be no additional deficit and we will find money either through borrowing from banks or we will reshuffle budget allocations."

The government said last week that it would buy back the loss making plant to avert a closure and the loss of 5,500 jobs, mindful of an election due by May amid an official unemployment rate of 23.7%.

US Steel bought the then bankrupt Sartid steel mill in the central city of Smederevo in 2003 for USD 33 million, the first major privatization deal after the ouster of former strongman Slobodan Milosevic in 2000.
The plant has been running well below annual capacity of 2.4 million tonnes for the past five years and in the first three quarters of last year US Steel's Serbian and Slovakian units made a combined loss of about EUR 50 million.

After the signing ceremony, Mr David Rintoul, US Steel's vice president for operations in Europe, said that the company had to write off assets in the Serbian unit worth up to USD 450 million.

US Steel had earlier blamed the plant's woes on its reliance on purchased coke, a less favorable product mix, the slow pace of economic recovery in the region and pressure from lower priced imports.

(Sourced from www.reuters.com)