ArcelorMittal signs AM Italia plan with new steel, DRI strategy

• Italian government to take a stake in AM Italia
• Plan includes DRI, EAF development
• AM Italia to produce 8 million mt/year of steel by 2025
• Investments planned for lower-carbon steelmaking
• AM InvestCo can withdraw if investment agreement not executed by Nov 30

AM InvestCo, the main holding company of ArcelorMittal Italia (AM Italia, formerly Ilva), and the Ilva Commissioners on Wednesday signed an amendment to the original lease and purchase agreement for Ilva, ArcelorMittal stated. The Italian government will take a stake in AM Italia, but the percentage will be determined by November 2020, according to the official notice.

According to the ArcelorMittal statement, the amendment agreement “is structured around a new industrial plan for Ilva, which involves investment in lower-carbon steelmaking technologies. The core of the new industrial plan is the construction of a DRI facility to be funded and operated by third party investors and an EAF to be constructed by AM InvestCo.”

According to local sources, AM Italia’s current crude steel production rate is 4.1 million mt/year. In Wednesday’s statement the company did not report the production target, but when asked separately by S&P Global Platts, ArcelorMittal confirmed that in the new agreement AM Italia has targeted 8 million mt/year by 2025 and it will also revamp AM Italia’s idled No. 5 blast furnace using “the best practice available.”

AM InvestCo and the Ilva Commissioners, which include Italian government officials who managed the former Ilva when it was in administration, have entered into a separate settlement agreement whereby AM InvestCo agreed to revoke its notice to withdraw from the original agreement and the Ilva Commissioners agreed to withdraw their request for an injunction, which was scheduled to be heard in the Civil Court of Milan on March 6.

If the investment agreement is not executed by November 30, AM InvestCo has a withdrawal right, subject to an agreed payment, that ArcelorMittal did not quantify in its statement, but that according to a draft of this final agreement seen by Platts, should be around Eur500 million. Final closing of the lease and purchase agreement is now scheduled for May 2022 instead of August 2023.

As previously reported, ArcelorMittal signed a non-binding agreement with the Ilva Commissioners in December to continue negotiations on a new industrial plan for AM Italia involving investments in green technology, together with discussions about a government-controlled entity possibly taking a substantial equity investment in the operation. The agreement was signed after the company, in November, announced plans to withdraw from its Ilva purchase as consequence of a law changed by the Italian government that removed ArcelorMittal’s legal protection for implementation of an environmental clean-up plan.

— Annalisa Villa