| SMEDEREVO, Serbia
SMEDEREVO, Serbia Dec 15 China's Hesteel
plans to invest $120 million in 2017 to upgrade
Serbian steel mill Zelezara Smederevo, which it bought from the
Serbian government this year in the first major Chinese
acquisition of a Serbian company.
On a visit to the plant southeast of Belgrade, Chairman Yu
Yong said the plant had turned a profit last month - its first
for seven years - and expects to make a pretax profit of 20
million euros ($21 million) next year.
Zelezara Smederevo is the first European steel plant to be
bought by a steelmaker from China, which accounts for about half
the world's steel production and whose cheap exports have been
blamed for a slump in steel prices.
But prices have rallied in the past few months as Beijing
has curbed overcapacity and embarked on a domestic
infrastructure spending programme to stimulate flagging economic
growth. U.S. and European anti-dumping measures have also
Hesteel, China's biggest steelmaker, paid 46 million euros
to take over the loss-making plant, pledging to preserve the
jobs of its 5,050 workers and invest in a total of $300 million
in its future.
"The money will be used to renew equipment, improve
technology and modernise the production process," Yu told
reporters after a tour of the plant with Serbian Prime Minister
Zelezara Smederevo is capable of producing 2.2 million
tonnes of crude steel annually but produced just 875,000 tonnes
last year. Hesteel has said it plans to raise production to 2.1
million tonnes in three or four years.
The plant was bought back by the Serbian government from US
Steel in 2012 for the token price of $1 to prevent its
But the Balkan country is under pressure from the
International Monetary Fund to privatise inefficient state firms
as a condition of a 1.2 billion-euro IMF loan. Serbia's previous
attempts to sell off its biggest state companies have failed.
China has invested more than $1 billion in Serbia, mostly in
the form of soft loans to finance highway and energy projects,
as part of its so-called belt and road initiative to open new
foreign trade links.
Vucic invited China, whose ambassador to Serbia also took
part in the steel-plant visit, to buy heavily indebted state
copper mine RTB Bor.
"I know I may sound pushy, but I have to make a plea one
more time to speed up talks about RTB Bor. China is the only
country that can help us with it," he said.
Serbia has begun the formal process of joining the European
Union but is not expected to become a member until the 2020s. It
also has friendly relations with Russia.
($1 = 0.9604 euros)
(Reporting by Georgina Prodhan. Editing by Jane Merriman)