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A view at the Smederevo Steel Mill in Smederevo, Serbia on April 18, 2016. [Photo: Xinhua]

Chinese company Hebei Iron and Steel Group, or HBIS, has signed an agreement to buy a loss-making Serbian steel plant in the city of Smederevo.

The 52 million US dollar agreement was signed on Monday with the Serbian government, who had been struggling for years to find a buyer.

HBIS President Yu Yong says that the Group's planned investments in the next five years will turn the factory into one of the most competitive in Europe.

"We are happy to enable investments for this steel company by using our new technology in production. We are sure that we are competent enough that we will build Smederevo into a new complex for steel production with improved equipment and better quality of products. We will make Smederevo a modern project for international cooperation between China and Central and Eastern Europe."

Prime Minister Aleksandar Vucic says the deal is important for his country, which is in great need for foreign investment.

US Steel ran the company from 2002-2012, before reselling it to the Serbian state for a symbolic price of 1 US dollar, due to losses.

HBIS plans to invest at least 300 million euros in the steel mill.