Italian authorities work to resolve production halt at Riva Acciaio

Friday, 20 September 2013 15:49:31 (GMT+3)   |   Brescia
       

Regarding the halting of production last week at seven plants of Italian steelmaker Riva Acciaio, Italian Economic Development Minister Flavio Zanonato has stated, "We are seeking a path for the resolution of the problem. There exists the will to achieve this in the shortest possible time, while the company will ask the magistrates in Taranto for permission to dispose of the necessary funds for the restart of its production activities." The minister was speaking following a meeting held in Rome today, September 20, which included the participation of Labor Minister Enrico Giovannini, Riva Acciaio director Cesare Riva, legal administrator of the Riva estate Mario Tagarelli, and Ilva president Bruno Ferrante.

Last week, Riva Acciaio had halted operations at seven plants in northern Italy and sent home 1,400 workers. Riva Acciaio said it was forced to take these measures due to an order issued by magistrates earlier this year for the seizure of €8.1 billion of assets belonging to the Riva family, owners of Riva Acciaio, as part of a probe into alleged environmental crimes at the Riva family's steel company Ilva which is based in the southern Italian city of Taranto. Riva Acciaio claimed that the seizure order stemming from the Ilva proceedings had caused the blocking of its banking operations, making it impossible for it to run its northern Italian plants. Early in the current week, Italian Prime Minister Enrico Letta had criticized Riva Acciaio for suspending production and laying off workers, stating that the company was definitely capable of continuing its operations and adding that the government was considering placing the plants under special administration. Meanwhile, on Wednesday, September 18, Riva Acciaio lodged an appeal against the seizure of Riva family assets by the Italian authorities.

According to the Italian employers' association Confindustria, the halt of production at Riva Acciaio, which produces around 1.5 million mt of long steel products per year, is damaging steelmakers and their suppliers whose combined annual turnover from the domestic market alone amounts to €1.8 billion. Furthermore, Italian steel association Federacciai and domestic metals association Assofermet have warned that a domino effect may hurt Riva Acciaio's customers and its suppliers.

Confindustria has stated the production halt at Riva Acciaio could boost steel prices by up to 20 percent, while market analysts have said the European long steel market is oversupplied and that the effect on prices might not be as pronounced as the estimated 20 percent price rise.

As regards Ilva, Europe's largest steel plant, a two-year clean-up operation was launched after toxic emissions from the plant were found to have caused abnormally high levels of cancer and respiratory illnesses in the surrounding area. In June this year, the Italian government appointed a special commissioner to run the troubled plant, which accounts for 40 percent of Italy's overall steel output and to oversee the cleanup operations. Meanwhile, from late October Ilva is planning to restart a blast furnace with a capacity of about 2 million mt per year, which will allow it to increase its annual production to around 7.5 million mt, two sources with knowledge of the situation have said. While both Ilva and Riva Acciaio belong to the Riva family, "Ilva has not been affected by the latest developments. It is currently operating with two out of its five furnaces and it will restart a third furnace in October," one of the sources said.

Two Ilva affiliates - Taranto Energia and Ilva Servizi Marittimi - which provide energy and shipping services to Ilva's steel operations, have been impacted by recent seizures, but this has had no immediate influence on Ilva's output, the sources said. "Things are fine for now, but Ilva survives day by day at the moment. There are no guarantees for the long term," the sources said.