Italy likely to take majority stake in ArcelorMittal Italia : sources

Invitalia, Italy’s agency for investment promotion and enterprise development, will likely take a majority stake in troubled steelmaker ArcelorMittal Italia, with Arvedi — the country’s second-largest flat steel producer — possibly taking a minority stake at some stage, sources said.

Ongoing talks between government representatives, unions and ArcelorMittal could end with the latter being left with no stake in the Italian business, whose assets would be injected into a new company, the sources also said.

ArcelorMittal declined to comment, as did Arvedi, while Invitalia was not available to comment.

“Everything will be clear in few weeks. AM is the one that is deciding the future,” a union source said.

ArcelorMittal agreed to buy the business — Europe’s biggest single-site steel company and then known as Ilva — in 2018 under a lease-and-purchase agreement for Eur1.8 billion ($2.1 billion) and to invest another Eur2.4 billion to clean up and modernize the plant, which has been dogged by environmental issues.

But a change in the law removed ArcelorMittal’s legal protection in implementing the environmental clean-up plan and last November it said it wanted to withdraw from the deal in November 2020, at a cost to it of Eur500 million. Final closing of the lease and purchase agreement is scheduled for May 2022.

“If it [ArcelorMittal] will leave who can replace them and enter with the government?” the union source said. “If the former Ilva, as very much wanted by the Italian government, converts some of its blast furnaces into greener electric arc furnaces, sustained by EU funds, that could then see Arvedi enter as a minority shareholder in the new company but…this is not sure [to happen].”

“Arvedi albeit being a large producer, is not as big as ArcelorMittal and Taranto is a very complex site”, the source said, echoing others.

Arvedi, whose annual crude steel output around 5 million mt through its two EAFs, has in the past bid for Ilva in a joint venture with Indian steel producer JSW.

In the meantime, ArcelorMittal Italia has slightly increased production of late, casting around 7,500 mt/day, up from 7,300 mt/day but still at a very low rate from just two out of its four blast furnaces, as it re-started some lines.

According to union sources, some lines the company halted in July — such as zinc-coating line number 2 and then number 1 — restarted this week, together with hot-rolling mill number 2. Plate rolling mill number 2 was expected to restart on Oct. 12.

— Annalisa Villa