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Slovakia clinches deal on U.S. Steel plant

The U.S. Steel plant in Kosice is pictured on November 17, 2012
. Slovakia and U.S. Steel clinched a deal Tuesday ensuring the steelmaker would keep its mill in the eastern industrial hub of Kosice for at least five years and thus remain the country's largest employer.

Slovakia and U.S. Steel clinched a deal Tuesday ensuring the steelmaker would keep its mill in the eastern industrial hub of Kosice for at least five years and thus remain the country's largest employer.

"The deal guarantees that U.S. Steel will maintain ownership of the plant in eastern Slovakia for at least five years and it won't cut jobs," Prime Minister Robert Fico told journalists in Koscice after inking the deal with David Rintoul, CEO of U.S. Steel's Slovak unit.

"We have created conditions that motivated the company to stay and keep making steel here," Fico said.

He added that the government had offered U.S. Steel energy and environmental incentives to stay invested in the plant without providing further details.

U.S. Steel Kosice said late last year it was considering several buyers for its huge mill which provides more than 11,000 direct, and thousands of other indirect jobs in Slovakia.

While the company has kept mum about its reasons for a possible exit, the outspoken Fico hinted strict EU environmental rules, high commodity prices and the end of a 10-year tax holiday were to blame.

With Slovak joblessness spiking to an eight-year high near 15 percent, Fico has been scrambling to woo U.S. Steel with energy incentives to offset the $500 million (388 million euros) the group would need to invest by 2016 to comply with EU rules.

As meltdown menaces Europe's steel sector, demand for steel remains healthy in Slovakia, home to three major car plants run by giants Volkswagen, PSA Peugeot Citroen and Kia.

Opened in the 1960s, the communist state-owned giant Eastern Slovakia Steel Works (VSZ) was sold in 2000.

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