The British want to nationalize the steel plant. Can it happen to US Steel?
The Constitution allows expropriation only under certain conditions.
British MEPs before Easter At an extraordinary meeting, they passed a law that will allow the government to take control of British Steel steelmaker. It is the only functional steel plant in the United Kingdom.
According to this Act, the government can buy a steel plant owned by the Chinese Jingye Group for the « fair market price ».
Industry Minister Jonathan Reynolds says that its market value is « actually zero ». It hints that British Steel, which employs 2700 people, is already loss -making and the Chinese owner has planned to close it.
This is trying to prevent this and the unusual step defends the security-economic interests of the state.
Košice US Steel fell into a giant loss of 100 million, complaining about weak demand Read
The US Steel steel plant has also fallen into a large loss last year and has been speculated for a long time that the US owner will sell it. Would it be possible to use a similar model as in the United Kingdom?
In the article you can read:
- Whether a private company can be expropriated in Slovakia.
- What conditions would be fulfilled to make the state interfere with private property.
- How much can US Steel Košice cost?
How to expropriate the factory
According to the Slovak Constitution, ownership right can be reduced or private property only in the public interest and for reasonable compensation. This is what happens, for example, in the purchase of land for motorways or significant investments such as the arrival of the Volvo car to Košice.
The expropriation of land in the public interest was simplified last year by the Act on Strategic Investments. However, it does not allow to expropriated existing industrial enterprises such as the US Steel Košice.
The partner of the law firm Havel & Partners Ondřej Majer says that it would be necessary not only to accept a new legal regulation, but also to prove the public interest. If the state wanted to expropriate the steel plant, it would have to prove that it is a critical infrastructure, a threat to the security of the state or a strategic raw material.
« Although the protection of the state’s economic interests itself is not explicitly referred to as the reason for which the owner can be withdrawn the owner’s right, in certain circumstances it could be included under the broader concept of public interest, » thinks the partner of the law firm Vojčík & Partners Leo Teodor Vojčík.
Protection of employment in the region as in the US Steele Košice is working More than 7700 people would probably not be a sufficient reason to defend the public interest in expropriation. Likewise, the private company is loss -making.
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Tailored to the tailor -made law
Any law for expropriation of the Košice factory (Lex US Steel) would also have to be in accordance with the investment protection agreement between the US and Slovakia. « The agreement between the CSFR and the US could apply on mutual support and protection of investments from 1991, which is also binding for Slovakia, » explains Majer.
This agreement also prohibits expropriation with the exception of the existence of the public interest. If the state did not comply with it, Slovakia would be threatened with international arbitration.
He already has experience. The Dutch owner of the Slovak Health Insurance Company Union sued Slovakia for her for her first government Robert Fico (Direction) The law has forbidden to make a profit.
In 2012, the Arbitration Court first decided in favor of the insurance company and replied its compensation of EUR 22 million. However, in the appeal proceedings, the state revealed this decision in 2018. Although he avoided compensation, the dispute lasted ten years and cost him considerable money.
The violent nationalization of the American ironworks in Košice would also damage Slovakia’s reputation among investors. They would worry about the security of their current or future investments.
Alternatives to expropriation
Instead of expropriation, the government could agree on buying a part of the factory with US Steel owners. She would enter as a co -investor there, for which she would gain a share and partial management control.
« Such solutions are less risky and socially acceptable than forced withdrawal of property right, » Vojčík thinks.
Something similar happened when repurchase of the stake in the Slovak Gas Industry (SPP) in 2013. Since he already owned the majority, he finally gained 100 percent of shares.
How much would it cost US Steel
In the event of expropriation, the state would have to pay the owner a reasonable price for the factory. It could be in the order of hundreds of millions of euros that would even more burden the state treasury at a time when the government consolidates public finances.
In 2016, the Czech company Moravia Steel, the Chinese group He Steel and the Chinese energy holding CEFC were interested in the purchase of the US Steel Košice US Steel. Czechs for it According to Hospodářské noviny They offered 700 million euros, the Chinese up to 1.5 billion euros. The Americans also appreciated it at 1.5 billion euros.
The current US Steel Košice market value could be influenced by last year’s loss and not very favorable sector prospects in Europe, which is facing a crisis for cheap Chinese steel.
In addition, the Košice factory will need hundreds of millions of investments in the modernization of production to be competitive. These include, for example, the replacement of high furnaces for electric coke. A potential buyer could use these investments as an argument to reduce the purchase price.
For completeness, in 2019 received US Steel Management bizarre offer To buy a factory for one euro and temporary takeover from the Košice County. Chairman of the Košice Self -Governing Region Rastislav Trnka He explained her to worry about employment in the region if the factory began to dismiss in bulk. The steel mill refused his offer.
