US Steel reportedly nearing sale of Slovak steel mill to Chinese suitor

By bne IntelliNews January 24, 2017

US Steel is pursuing talks over the sale of its plant in Kosice with a Chinese suitor, having rejected the interest of a potential Czech bidder, local media claimed on January 24.

Speculation that US Steel is looking to sell the largest employer in eastern Slovakia has been on and off for years. However, suggestions that specific Chinese or Russian investors are keen to buy the mill emerged in 2016. Information on any potential deal has remained limited, however, with the government keen to try to control the situation at a plant that employs 10,000 workers in one of Slovakia’s unemployment blackspots in the east of the country.

The likelihood that the US investor will withdraw from the Slovak plant have only risen since Donald Trump took office in Washington, claim some. The new president has said he will offer incentives for US corporations to repatriate investment.

US Steel has informed Czech Moravia Steel that it is not interested in talking over a deal, according to the Korzar daily. The Pittsburgh-based investor is pursuing exclusive negotiations with China’s He-Steel Group, the report suggests. An official statement to that effect is expected on January 26 following a US Steel board meeting.

The pair of suitors was reported to have offered bids late last year. Moravia Steel has long shown interest in the Slovak plant, but owner billionaire Tomas Chrenek has now failed to reach an agreement on price for a second time, it appears.

The interest of the Chinese investor has been mooted for some months. Last year it was also reported that Russian suitors had visited the plant. That clearly annoyed the government, which insists that it wants the US investor to stay.

Bratislava has also sought to assert that it will oversee any deal should US Steel sell, and that the state could buy a stake itself. Prime Minister Fico personally led a campaign in 2013 to persuade US Steel to remain invested in the plant, in return for an extra €15mn in incentives over 15 years.

The PM stated earlier this month that the government has no information that US Steel is looking to sell. However, Mikulas Hintos, a trade union leader at the plant, told TASR  the mill is up for grabs. However, he added that he does not know the details regarding potential bidders.

"We asked US Steel Kosice President Scott Buckiso recently on updates regarding the plant’s sale,” Hintos told the newswire. “He said that the plant is still on offer, but that the point at issue is the price. To his mind, if somebody comes forth with an offer involving a large amount of money, they’ll consider it."

"We have no insight as to whether the prospective buyer is from China, Russia, Ukraine or the Czech Republic. Nobody’s ever told us," said Hintos.

Pushing through tough global markets, US Steel Kosice turned to a €17mn profit in 2015 from a €369mn loss a year before. The company has, however, been involved in several hot-tempered negotiations with the Slovak government, and Fico insists the investor has a responsibility to the struggling region in which it sits.

    

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