Arcelor notifies Italy of Ilva exit

Luxembourg-based ArcelorMittal has today notified the Italian government of its intention to withdraw from the lease agreement for steelmaker Ilva, giving the extraordinary commissioners 30 days to take responsibility for the assets.

The company began operating Ilva under a lease agreement that started on 31 October 2018 and is scheduled to finish in August 2023. Under the terms, Arcelor has a right to withdraw in the event that a new law affecting the company’s ability to execute its environmental or industrial plan is implemented, it said.

The Italian parliament yesterday removed ArcelorMittal’s legal protection following an amendment at the end of last month of the “Salva Imprese” decree.

The second issue that Arcelor has faced is the fate of its blast furnace two at Taranto, which local authorities have pushed hard to shut down. In September, the company was granted a 90-day extension to the ordered shutdown by the local court so that it could fulfil certain prescriptions, which have been deemed impossible to meet. “The shutdown would make it impossible for the company to implement its industrial plan, operate the Taranto plant and, generally, perform the agreement,” the company said today.

Ilva has been operating under nameplate capacity for a number of years, but among Arcelor’s targets for the asset was to ramp up its output in 2019 and going forward. But amid unfavourable market conditions, the company decided to slow down the ramp-up this year, and the Taranto plant is now operating at under 4.5mn t/yr.

Ilva is still under technical force majeure following a fatal crane accident in July. Market participants are still reporting continuous order delays and a general uncertainty about the future of the plant has pushed some buyers to procure from other sources.

“Other serious occurrences, independent of the company’s will, have also led to a situation of legal and operational uncertainty that has further significantly impaired the ability to carry out the necessary operations at Ilva and operate the Taranto plant,” Arcelor said today.