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Serbia to Halt Production at Its Sole Steel Mill Next Week

July 2 (Bloomberg) -- Serbia will temporarily halt production at Zelezara Smederevo d.o.o., its only steel plant, and may restart one of its two furnaces in September.

Production will be halted from July 10 to Sept. 1 because “at this moment it is economically justified and the best solution,” spokeswoman Tijana Koprivica said in a phone interview in Belgrade today. Efforts to sell Zelezara continue after the government bought back the mill from U.S. Steel Corp. earlier this year. The management said last week it would shut down the plant for at least three months to cut losses.

“The company is of strategic importance for Serbia,” Koprivica said after Economy Minister Nebojsa Ciric met with the managers and union leaders from the unprofitable, state-owned steel mill east of Belgrade.

The government has twice extended the deadline in a tender for the mill’s sale, giving potential investors until Sept. 10 to make an offer.

Former owner U.S. Steel halted one of the two furnaces last year. The plant makes hot- and cold-rolled steel products and has operated at less than a half of its annual capacity of 2.2 million tons for more than two years, according to the company website.

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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