Mechel Ironworks Sisak officials said the decision was made because market conditions regarding the company's production and raw materials used in the production had drastically changed.
"Given the above stated factors the company made a decision to suspend operations," the statement said.
The contract with Russia's Mechel was signed on 6 February 2003 and on 10 March, after it received bank guarantees, the Croatian government adopted necessary decision under which the contract on the sale of the Sisak Ironworks became effective.