By Bojana Milovanovic
When US Steel in 2003 purchased the Serbian steel plant Sartid — which was undergoing bankruptcy proceedings — a potential disaster seemed to have been averted. Eight years later, due to the global economic crisis, the company with production facilities in Smederevo is fighting for survival.
Economy and Regional Development Minister Nebojsa Ciric told the media that the government is negotiating with the company’s executives, expecting a solution before the factory shuts down.
“We mostly have to think about the major influence US Steel has on our exports, and that 5,500 people are working there,” Ciric said. He also pointed out that US Steel had been in a similar situation in late 2008 and early 2009.
Smederevo Mayor Predrag Umcevic recently announced that certain taxes would be cut for US Steel to help reduce operating costs and retain all workers.
Umcevic told the media that the Smederevo town council decided to reduce daily fees for the use of the Danube River bank and talks are underway to also cut the environmental tax.
Umcevic announced that the environmental tax could be reduced according to the company’s contribution to environmental protection. The local government, he indicated, is receptive to that demand, and is now considering what US Steel can do to help environmental protection.
Umcevic added that initial estimates suggest it might be reduced from the current 100m dinars to 2.5m dinars per year.
“By cutting taxes we want to help US Steel, because it has voiced the desire not to downsize the workforce,” the mayor said.
Economy analyst Milan Kovacevic thinks measures taken by the government and local government can help, but the problem can only be solved by the stabilisation of the market and greater demand for steel.
“That is not a problem only in Serbia, but in the region and Europe. Production capacities exceed demand,” Kovacevic told SETimes.
US Steel incurred a loss of 15m euros in 2010.
One of the blast furnaces at the steel plant is currently in “silent mode”. Company chiefs in the United States are unhappy with the plant’s output and have announced the possibility of shutting down both furnaces, or dismissing a number of workers.
Before the US Steel purchase, Sartid had worked far below its full production of 2.2 million tonnes. US Steel Serbia produced over 1 million tonnes of raw steel in its first year, a 40% increase compared to 2003.