First problems in Zelezara – The Chinese angry at the Serbian authorities for two reasons

Less than two weeks after the arrival of the Chinese Hesteel to Zelezara Smederevo, the first problems between the company and the Serbian authorities appeared.

According to Blic, the first problem relates to possible consequences arising from the investigation by the European Commission over the alleged dumping prices of steel in the export from Serbia to the EU and the possible penalties which might be placed on the new owner. The second one relates to hiring Peter Kamaras as the new owner's adviser.

As Blic has found out, Kaparas and his HTP Engineering will be special advisers to the Chinese owner in the transitional period before a team of Chinese managers takes over the running of the company.

– His appointment was the first stumbling block. The Serbian side believes that it's not appropriate that Kamaras should be hired as an adviser after the Assembly of Zelezara terminated the agreement on management with him on the account of the loss of EUR 150 million. Our reaction to this move was mild, but the Chinese expressed great dissatisfaction after the EC started the investigation over the alleged dumping prices of steel in the export to the EU – a Blic source from the Government says.

He adds that the Chinese have been demanding the explanation from the prime minister's cabinet since Friday.

– They had been assured that such a situation could not arise because everything had been done in line with the recommendations by the EC. Serbia had also given strong guarantees that the state hadn't been financing Zelezara since February 1, 2015. They are asking for a meeting in order to learn whether the Government will compensate them for the damage they might take if Brussels bans the export to the EU market or if the Smederevo steel starts being treated like Chinese steel, which entails customs duties of 25%. In addition to that, they demand to be explained what will happen if Belgrade fails to convince Brussels that the amount of state aid from 2012 till 2015 was half of what the future Chinese investments will be, and they've been announced to start at EUR 300 million. In that case, the EU will ask that Hesteel returns the overpaid amount to Serbia – the same source says.

Nobody in the Government or Zelezara wanted to comment officially on the current situation. Zeljko Veselinovic, president of the Union Sloga confirms that there's some difficulty in the communication between the Chinese and the Government of Serbia.

- The Chinese don't want to pay for the Serbian penalties and are demanding to meet with the authorities, so that, in the case that the EC imposes sanctions, the damage is compensated for by the state. As for Kamaras, I don't think they've made a right choice in hiring him – Veselinovic says.