Serbia Restarts Loss-Making Steel Plant After Nine Months

Zelezara Smederevo, Serbia’s sole steel mill, fired up one of its two furnaces today, restarting production after more than nine months as the government looks for an investor in the unprofitable plant.

The sale of the planned monthly output of 70,000 tons has been arranged for the year, Finance Minister Mladjan Dinkic said in a statement after visiting the state-owned steelworks in Smederevo, east of Belgrade. Talks are under way with “one of the biggest steelmakers in Europe on cooperation or possible partnership with Zelezara,” he said without elaborating.

Serbia has sought to sell Zelezara since January 2012 when U.S. Steel Corp. (X) gave up on the plant and sold it back to the state for $1. Following a failed sales tender, the government decided to restart production, even at a projected loss of 20 million euros ($26.1 million) in 2013. Employees have agreed to a 20 percent wage cut as part of efforts to curb losses.

Zelezara may get a preliminary contract with Fiat SpA (F) for supplying the car maker with galvanized steel, Dinkic said. The arrangement would help fund upgrades, including in making automotive-grade metal the plant doesn’t offer now, he said.

To contact the reporter on this story: Misha Savic in Belgrade at msavic2@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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