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Serbia signs sale deal with China's Hebei for ailing steel mill Zelezara Smederevo

Serbia signs sale deal with China's Hebei for ailing steel mill Zelezara Smederevo Author: Serbian government. Licence: All rights reserved.

BELGRADE (Serbia), April 18 (SeeNews) – Serbia's government said it signed on Monday with China's Hebei Iron and Steel a sale agreement for struggling state owned steel mill Zelezara Smederevo.

Earlier this month the government said the Chinese investor has submitted a binding offer to buy all 98 property units of Zelezara Smederevo for a total of 46 million euro ($52 million). China's second-biggest steel producer is set to invest a total of $300 million in fixed capital and infrastructure within an unspecified timeframe, it added.

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Hebei is set to transform the steel plant into the most competitive player in Europe, chairman Yu Yong said at the official signing ceremony, as quoted in a government statement. 

Hebei was the sole bidder in a government tender with a starting price of 45.7 million euro for the steel mill called last month.

The steel mill is equipped with two blast furnaces and three basic oxygen converters capable of producing 2.2 million tonnes of crude steel annually, but it has been operating well below capacity recently. The Chinese buyer's business plan envisages reaching a maximum annual output of 2.1 million tonnes.

The sale is set to help Serbia rein in public spending in line with its 1.2 billion euro stand-by agreement with the International Monetary Fund (IMF), signed in February 2015. As part of the IMF deal, the government committed to the resolution of over 500 state-owned enterprises through either privatisation or bankruptcy.

In January 2012, the Serbian government bought out the steelworks in Smederevo from US Steel for the token price of $1 in a bid to avoid the plant's closure and save thousands of jobs.

($=0.8843 euro)