Market debates ArcelorMittal’s future in Taranto

The Italian government and ArcelorMittal Italia will meet in court on 7 February if an agreement between the parties over the former Ilva steelworks is not signed by end-January. So said Italian economic development minister Stefano Patuanelli to local press.

The Italian judiciary would then rule on the right of ArcelorMittal to withdraw from its contract to run the former Ilva works.

When ArcelorMittal took over Ilva, the Taranto site came out of six years of administration, lack of maintenance and investment into outdated equipment. As a consequence, several accidents have befallen the company, some of them fatal (see Kallanish passim).

Taranto is struggling to produce also due to disruptions in delivery of raw materials. Iron ore is currently being delivered to the port city of Brindisi, which is some 70km from the plant. This is due to an accident last year that saw the collapse of three cranes and one death at the port dedicated to Ilva in Taranto.

The company also outsourced many activities that were formerly done inhouse by the Riva family. It therefore had to deal with malpractice not only from its own workers but also from contracting companies, which is not always an easy task in a country like Italy, sources close to the matter tell Kallanish. They believe ArcelorMittal will leave Ilva because an agreement is impossible at this stage, considering also the need to cut at least 3,700 jobs. which the government will never accept for electoral reasons.

Other sources, however, believe ArcelorMittal will end up staying provided the government accepts to invest a large sum in the relaunch of Taranto. The industrial plan for the plant to produce steel using the DRI-EAF route will therefore be a state project, but may not be sustainable in the longer-term as blast furnace-route production is cheaper.

If there is an agreement, the level of crude steel production will stabilize at 5.5-6 million tonnes/year from the BF route, and an EAF will be added in a few years, sources suggest.

Another issue remains the “…foreign component” of the ArcelorMittal management of Ilva. “Italy remains an extremely complicated and competitive market that cannot be handled like France or Belgium,” one source comments.