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U.S. Steel pledges to keep Slovak operations at least for 5 years

| Tuesday, March 26, 2013, 9:15 a.m.

U.S. Steel Corp. will keep its steel mill in Slovakia operating for at least five years under a deal with that nation's government announced on Tuesday.

Slovak Prime Minister Robert Fico, who visited Pittsburgh on Sunday and Monday to discuss the deal with U.S. Steel CEO John Surma, signed the agreement at U.S. Steel's plant in Kosice and thanked the company for a “demanding yet fair negotiating process.”

“I have positively praised U.S. Steel for committing to maintaining employment level(s), that they will not use mass layoffs as a tool, and I'm also very grateful that U.S. Steel committed to continue their cooperation with other enterprises in Slovakia,” Fico said through an interpreter during a news conference at the plant.

The largest steel producer in the United States won't sell its Slovak unit, one of the largest employers in the country, in exchange for environmental and energy-related concessions, Fico said.

“This moment is extremely important for the whole country,” he said. “The government wants U.S. Steel to continue operations, and it understands that steelmaking has to have a favorable environment here.”

Company representatives in Pittsburgh did not respond to messages seeking comment.

Speaking at the news conference, U.S. Steel Kosice President David Rintoul called the agreement a victory for the company, Slovakia and the plant's 11,000 workers.

“The steel market is very competitive in the EU (European Union), and this plant has done very well and survived through a difficult time,” Rintoul said. “This is a good plant, at a good location, with great people.”

The company said in November it was considering selling the mill after it received unspecified offers. Concern that the sale would lead to job losses at a time when unemployment hovers close to a nine-year high prompted Fico to offer concessions to avert the exit.

U.S. Steel disclosed last month that it would have to pay an estimated $400 million to upgrade environmental controls at the plant during the next three years.

The plant is the steelmaker's last operation in Europe, where slowing demand is weighing on prices and shipments. Last year, it sold its mill in Serbia for $1 to that country's government.

The Serbian plant accounted for most of the $200 million loss on European operations U.S. Steel recorded in 2011. After selling that plant, the company's European operations recorded operating income of $34 million in 2012.

U.S. Steel pledged to maintain employment at the Slovak unit, while the government will change legislation allowing the company to draw about $18 million a year in subsidies for using renewable energy sources, Fico said. The company also will be granted unspecified environmental concessions.

Fico said the deal does not provide the company with tax breaks or direct subsidies.

U.S. Steel bought its Slovak operations in 2000 for $475 million. The plant, with an annual capacity of 5 million tons, has two coke batteries, three blast furnaces and units that produce sheet, tin-mill products and pipes.

Bloomberg News contributed to this report. Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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