AM Italia negotiating operating rights with government

ArcelorMittal is negotiating with the Italian government for a solution to allow the continued operation of its ArcelorMittal Italia subsidiary from September 7, when a current legal safeguard for its operation expires, Lakshmi Mittal, ArcelorMittal chairman and CEO, said Thursday.

“Our expectation is that measures will be in place by September 6,” Mittal told investors on a webcast to discuss the company’s second quarter results. “We are in negotiation with the Italian government, which is working on providing us with legal safeguards…the works should continue to operate [however] no assurance can be given at this point in time.”

The AM Italia — known as Ilva before ArcelorMittal took it over last year — has not been environmentally compliant for some time. It has been given license to operate under government protection until September 6. However, the situation regarding any future license to operate the works is still unclear following a recent fatal accident on raw materials Pier No. 4 at the works in Taranto.

The latest accident occurred on the heels of an Italian public prosecutor ordering a production halt of blast furnace No. 2, following allegations that improvements promised for the works after an accident there in 2015 — when the mill was under previous management — had not been fully undertaken.

Mittal confirmed Thursday that Pier No. 4 continues under seizure. With operations currently only at Pier No. 2, the works is losing inputs of 10,000 mt/day of raw materials, which means the steelworks is currently producing at between 3 million mt and 3.5 million mt/year capacity, he said. “We don’t expect the situation to last indefinitely,” he said. All blast furnaces at the works are currently in operation, he said.

“ArcelorMittal aims to dramatically improve the performance of ArcelorMittal Italia in the second half,” Mittal said.

But the plant’s expected ramp-up to a 6 million mt/year run-rate, previously expected by H2 2019, has been slowed due to weak market conditions, ArcelorMittal said in its investor presentation. 

ArcelorMittal has a net capex commitment at ArcelorMittal Italia of Eur2.10 billion ($2.33 billion) through 2024, around half of which is in environmental measures, with all interventions in this area progressing in line with an accelerated timetable, according to the presentation.

— Diana Kinch