NEW YORK U.S. Steel Corp. and the Slovak government have signed a memorandum of understanding (MoU) ensuring that the Pittsburgh-based steelmaker will remain the owner of the Koice SRO plant for at least five more years.
"This moment I consider important not only to Koice (and) eastern Slovakia but also for the whole Slovak Republic," Prime Minister Robert Fico said in a March 26 statement following the signing. "The government is fully aware of the importance of U.S. Steel for the region and for the Slovak economy."
Under the terms of the MoU, the government will offer relief for energy, transportation and environmental costs but will not give U.S. Steel any direct investment incentives or tax breaks. After five years, the parties will reassess the deal. If U.S. Steel sells the assets within five years, then the steelmaker will pay a penalty of up to $60 million to the Slovak Republic, according to the MoU.
"Today, we ... created conditions that were conducive to U.S. Steel (to) remain in Slovakia and continue to produce steel," Fico said.
U.S. Steel has invested heavily in the facility since acquiring it in 2000, and chairman and chief executive officer John P. Surma said in a January conference call that the mill was an "excellent facility" with low costs and a strong record of profitability (amm.com, Jan. 30). However, rumors circulated for months that the steelmaker might be looking to divest the Slovak steel complex as challenging economic conditions plagued Europes steel sector, particularly after the company sold its only other European operation in Serbia last year in an effort to minimize losses (amm.com, April 25).
A spokesman for the Slovak producer confirmed in November that it had received a number of expressions of interest in acquiring the mill (amm.com, Nov. 14), with Surma reiterating the news in the January call. "Weve had some expressions of interest in the (Koice) facility to see if it might be worth more to somebody else than it would be to us," he said at the time.
The integrated Koice plant can produce some 4.4 million tonnes of crude steel annually, which it casts into slab for rolling, as well as some value-added products like tinplate and pipe.