The Arvedi group is eyeing Piombino-based steelmaker JSW Italia after Arvedi’s recent acquisition of Terni AST, multiple sources confirmed to S&P Global Platts on Feb. 2.
Arvedi became the largest Italian flat steel producer after the Terni acquisition with a total of 5.5-6.0 million mt of steel produced annually, as Acciaierie d’Italia, the former Ilva, with installed capacity to make 8-9 million mt/year of crude steel, now produces around 4.5 million mt/year.
Industry sources confirmed to Platts that there is real interest in the acquisition, although it is still very much in a preliminary phase. The JSW Italia plant is attractive to Arvedi as it needs an additional 1.5-2.0 million mt/year of coils via a new electric arc furnace (EAF) to feed the cold-rolling units it is building at the Trieste site of Servola.
Arvedi currently runs a pickling line at Trieste with a capacity of 600-800,000 mt/year, an 800,000 mt/year CR line and a slitting line with a capacity of up to 200,000 mt of coils, sources close to the mill told Platts. The working lines are not running at their full capacity and are fed by coils made by Arvedi’s main mill in Cremona.
The JSW Italia site also has a lot of land and is close to the large port of Piombino. In the past, there have been talks of mills wanting to create a consortium to build a direct reduced iron (DRI) facility in Piombino and sources told Platts that Arvedi could be interested in leading such a joint venture, allowing it to source some of the output for what could be its new EAF in Piombino.
Mill working at around 40% of design capacity
JSW Italia is currently owned by Indian Group JSW, which bought the Italian mill, previously named Aferpi, in 2019 from Algeria’s Cevit.
According to sources, JSW bought it for around Eur70 million ($79 million) and it has invested Eur70 million since without finishing the industrial plan set out when it made the purchase.
Under the plan JSW intended to install two new EAFs with a combined capacity of 3 million mt/year to produce semis for long and flat steel production.
The EAFs were never built, with JSW feeding the rolling lines with blooms and billets from its mills in India.
The mill has a design capacity to produce 600,000 mt/year of wire rod, 300,000 mt/year of rebar and a rail unit with a total design capacity of 350,000 mt/year. According to sources close to the mill, it was working at only around 40% of its design capacity.
Platts contacted JSW, but received no reply by the time of publication.
The unions and the Italian government are likely to support any acquisition because the JSW Italia mill temporarily laid off most of its 1,400 workers, which according to the unions cost the Italian government around Eur23 million/year.
As a result, Italy’s national agency for investment and economic development, Invitalia, has been called to study the dossier of JSW Italia to eventually take a stake in the long steel producer, as already reported by Platts.
New galvanizing line and coating line
Arvedi also needs additional coils as it is building a 250,000 mt/year hot-dip galvanizing line and a 200,000 mt/year coating line, which are both expected to be commissioned by the end of 2022. In 2023 a second galvanizing line is expected to be built with a capacity of 300,000 mt/year, a source closed to the mill told Platts.
In Cremona, Arvedi has two EAFs that feed 75% of the finishing operations there. The No. 1 furnace has 1.4 million mt/year of crude steel production capacity and the No. 2 furnace was upgraded and expanded in 2021 to 2.6 million mt/year.
Although the company has worked to increase its production and just bought AST Terni to add 1.5 million mt/year of production capacity it still needs another 1.5-2.0 million mt/year of hot-rolled coil production by 2023-2024 due to the cold mill investments.
Arvedi uses around 2.4 million mt/year of scrap, mostly sourced from Italy and the rest of Europe, along with 600,000-700,000 mt/year of pig iron and 400,000-500,000 mt/year of hot-briquetted iron (HBI). Italy is a major scrap-based steel producer, accounting for 17-19 million mt of scrap demand. It imports around 4-5 million mt/year of scrap, about 1 million mt/year of pig iron and around 700,000 mt/year of HBI, according to Platts’ archive.
There are expectations that scrap demand – as well as HBI and pig iron demand – will increase in Europe where mills that are trying to cut emissions will migrate to the EAF route.
Arvedi and JSW worked together in the past as the two companies teamed up to buy the former Ilva, now Acciaierie d’Italia, in 2018 when ArcelorMittal in the end managed to purchase it.
Platts reached an Arvedi spokesperson for comment, but the company declined.
— Annalisa Villa