ITALY: ArcelorMittal steel plant on the verge of being thrown out of Italy.


After being chased out Kazakhstan in October last year, ArcelorMittal is again on the verge of being thrown out of Italy.

According to Reuters News Agency, Italy’s government could put the former Ilva steel plant under special administration.

“Industry Minister Adolfo Urso told Reuters on Thursday, after its main shareholder ArcelorMittal rejected a state-backed plan to keep the site afloat. ArcelorMittal, the world’s second-largest steelmaker, took control of Acciaierie d’Italia (ADI) formerly known as Ilva in 2018. It currently owns 62% of ADI, while public investment agency Invitalia has the remaining 38%.” Reuters said.

Bogged down by an increase in energy prices and a drop in rolled steel coil prices, the steel plant has long been short of cash and has accumulated a huge debt pile with suppliers, including energy giant Eni.

“It is an option,” Urso told Reuters when asked if the government was considering the appointment of special commissioners to run the site. He did not rule out Rome injecting fresh resources into ADI despite ArcelorMittal dragging its feet.” Reuters said.

ADI directly employs 8,200 people at a huge steelworks in the southern city of Taranto and unions are urging the government to safeguard jobs.

The case risks ending in court with both the government and ArcelorMittal accusing each other of failing to respect their commitments.

According to Reuters, the government this week proposed that Invitalia inject 320 million euros ($351 million) into ADI and then raise its stake to 66%, as part of a broader plan to strengthen the company’s capital.

ArcelorMittal, however, refused to offer guarantees that it would provide further investments even as a minority shareholder, sinking the proposal.

“In an earlier parliamentary debate, Urso said “drastic action” was needed for the former Ilva steel plant, which the right-wing government of Giorgia Meloni deems as crucial for steel supply. Nothing that was planned has been realised. None of the commitments made have been fulfilled with regard to employment levels and industrial revitalisation,” Urso told lawmakers.” Reuters said.

Reuters quoted a source close to ArcelorMittal as saying that the group was ready to back the government’s plan provided it would continue to have similar governance powers to Invitalia.

“But Urso rejected such option, making reference to possible violations of European rules against state aid.” Reuters indicated.

In a related development Indian steelmakers Tata Steel and Lakshmi Mittal’s ArcelorMittal operating in the UK and Italy respectively are on the verge of shutdown owing to various environmental issues being raised against their operation.

“While plans are on the anvil for Tata Steel to close down its two coal-fired blast furnaces at its Welsh steelworks to shift greener and cheaper steelmaking units, Mittal’s steel factory, which is facing allegations of spewing cancer-causing chemicals, faces a government takeover.” New DEHLI said.

The closing down of Tata Steel has caused consternation among 2,800 workers who could lose their jobs by the end of 2024. However, the firm, which employs 4,000 workers totally at the furnaces in Port Talbot, has been trying to reassure the workers and unions that the decision is important for the long-term survival of the entire Port Talbot operation, but with little avail.

According to The Telegraph, Tata Steel chief executive T.V. Narendran says, “Our ambitious plan” is aimed at “guaranteeing long-term, high-quality steel production in the UK and transforming the Port Talbot facility into one of Europe’s premier centres for green steelmaking”.

The changes include replacing coal-fired blast furnaces with less-polluting, lower-carbon electric arc furnaces, which the company says, will melt scrap steel rather than producing virgin steel from iron ore. According to the estimates, the change will ensure a reduction in the overall UK CO2 emission by 1.5%. However, the changes would take about three years and would come at the cost of 1.25 billion pounds sterling, including 500 million pounds sterling paid by the government.

Comments are closed.