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
"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 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.