The removal of the legal shield that left managers liable to prosecution over environmental issues is not the only reason why ArcelorMittal on November 4 announced that it intends to exit its Italian Ilva asset. In fact, the Luxembourg-based global steel giant has told the Italian government that, in order to continue its investment in the Taranto plant, it will have to lay off half of the current employees, who total 10,700. Otherwise, the company will continue the legal process it has already started to exit the lease and purchase contract for the steel plant and its subsidiaries.
Italian prime minister Giuseppe Conte, in a three-hour summit with ArcelorMittal's management, has tried to persuade the company to backtrack by offering the restoration of the criminal immunity linked to the implementation of the environmental plan of the Taranto-based plant. However, ArcelorMittal representatives have hinted that this would not be the central problem. Given the negative market situation and the risk of having to shut down blast furnaces by order of local judges, the investment would no longer be attractive. The conditions for the continuation of ArcelorMittal's commitment are in summary three: the restoration of the legal immunity; the authorization to lay off approximately 5,000 Ilva employees to reduce targeted production from 6 million mt to 4 million mt per year; the approval of a law allowing the blast furnaces that are being examined by local judges to remain in operative for 14-16 months. ArcelorMittal has ordered the shutdown next month of blast furnace No. 2, the plant that was linked to a fatal accident in 2015. Months ago local court judges in Taranto had ruled that the prescriptions imposed following the accident had only been partially fulfilled.
The Italian prime minister defined the conditions set by ArcelorMittal as "unacceptable", but for now negotiations are continuing. Today, November 7, the Italian government will meet with local unions who are preparing to strike at the Ilva assets: workers will stop for 24 hours starting from 7:00 am on Friday at all Italian sites. Meanwhile, another sign has come from ArcelorMittal of its increasingly probable disinvestment. The steel giant has in fact presented its results for the third quarter this year, recorded a drop in steel production from 22.8 million mt to 20.2 million mt and a loss of $539 million, from a profit of $899 million in the same period of 2018.
Experts and market players have stated that if the negotiations between the Italian government and ArcelorMittal fail, finding a new investor will be an extremely difficult task. Without an investor, the company will be handed back to the management of special commissioners. According to various sources, given the current economic situation, Ilva would no longer be a good deal for ArcelorMittal, which would have every interest in exiting the investment. What is more, the company could consider the closure of the plant as a success, as it would eliminate the possibility of any takeover by one of its competitors.