Fri Jan 9, 2015 5:00am EST
* Serbia expects to seal sale contract by end-Jan
* Loss-making steel mill a huge drain on state coffers
* Esmark Inc's first foray outside North America (Adds finance minister, details)
By Ivana Sekularac
BELGRADE, Jan 9 (Reuters) - U.S.-based flat-rolled steel processor and distributor Esmark is set to take over Serbia's loss-making Zelezara Smederevo steel mill after submitting the only valid bid, the commission in charge of the privatisation said on Friday.
The bid by Esmark Europe, part of Esmark Inc, was the only one of three bids to meet all conditions set by the tender, said Bojan Bojkovic, the head of the commission.
He did not name the other bidders or give further details, but said the commission would study the offer in the coming days. "I expect the contract to be signed by Jan. 30 or 31," he told a news conference.
Serbia is trying to offload the loss-making plant as it seeks to rein in its budget deficit and public debt under a new loan deal with the International Monetary Fund.
Esmark's bid represents the company's first foray outside of North America since its founding five years ago.
Last month Serbia invited bids for an 80-percent stake in the mill, with the government offering to take on its $400 million debt to sweeten the deal. Zelezara, which has around 5,000 employees, swallows some $120 million in government subsidies per year.
Serbian Finance Minister Dusan Vujovic, addressing the same news conference, said: "Based on negotiations we had had with Esmark, I expect their bid will aim to maintain employment, to create added value and after that Zelezara should be able to cover all its expenses -- gas, electricity, salaries."
The mill was run by U.S. Steel from 2003 until 2012, when the government bought it back for $1 to avert its closure and the loss of thousands of jobs as operations suffered from weak steel prices and subdued demand.
The mill, located in the town of Smederevo, some 50 km south of the capital Belgrade, is currently operating only one of its two furnaces and posting a net loss of $10 million per month. (Reporting by Ivana Sekularac; Writing by Matt Robinson)
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