The Italian government has agreed to underwrite ArcelorMittal’s restructuring costs associated with continuing to operate the Ilva steel mill.
The Minister of Economy and Finance Roberto Gualtieri said the Italian government is willing to intervene directly to have a strong Ilva again. The steel mill is one of the largest employers in southern Italy with 10,700 workers, making it imperative for the government to ensure its success.
Lucia Morselli, the head of ArcelorMittal’s Italian subsidiary said the Luxembourg-India conglomerate wishes to move forward on the investment and will be ready to present a concrete plan to the government in about 10 days.
Under the investment plan, Ilva will invest in lower-carbon steelmaking technologies. ArcelorMittal will build the electric arc furnace while a DRI facility may be built, funded, and operated by outside investors.
In late 2019, ArcelorMittal announced it was pulling out of the 2018 takeover agreement of the mill after the Italian parliament removed a guarantee of legal immunity from prosecution over environmental risks during a clean-up of the heavily polluted factory site.
ArcelorMittal announced again it would abandon Ilva in February after the plant recorded daily losses of $2.2mn. However, In March, ArcelorMittal signed a deal promising a significant injection of Italian funding into the Ilva and would keep the company from walking away from the troubled plant.
Under the March agreement, the original lease and purchase agreement signed by ArcelorMittal took will close by May 2022. The new investment plan needs to be executed by November 30, 2020, otherwise ArcelorMittal could withdraw from the deal subject to an agreed payment. Italian trade unions criticized the March accord because of lack of details.
ArcelorMittal acquired control of Ilva in 2017, and fully took over operations in 2018. Under that original lease-and-purchase agreement ArcelorMittal agreed to buy Ilva, Europe’s biggest single-site steel firm, for €1.8bn ($2bn) and to invest another €2.4bn in cleaning up and modernizing the plant. ArcelorMittal agreed to pay €45m quarterly for 18 months to lease the facility, to be deducted from the purchase price.