Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Italy should emulate France and German by funding the green transition of ArcelorMittal’s ailing plant to prevent the closure of the country’s largest steelworks and a domino effect on the economy, the chief of the Italian steel industry body has said.
The Franco-Indian steel group, which owns a 62 per cent stake in the plant, formerly known as Ilva, has been resisting a government plan to place the steelworks into special administration, a move that would wipe out its equity. Rome said earlier this month that a special administrator would be appointed by the beginning of February.
Last year the European Commission approved €2bn in German subsidies to Thyssen Krupp for a so-called direct reduction iron plant, a new and greener way to produce steel, in Duisburg. It also greenlighted a French package of up to €850mn to help fund a plan to decarbonise ArcelorMittal’s plant in Dunkirk.
“Italy must spend money to facilitate the plant’s decarbonisation just like Germany has done for Thyssen Krupp and France for ArcelorMittal’s domestic plant,” said Antonio Gozzi, chair of Federacciai, the steel industry’s association.
“There’s steel overcapacity across the world, so if Acciaierie d’Italia (AdI) shuts down it doesn’t make a difference in the grand scheme of things,” Gozzi, who also chairs his family-owned steel group Duferco, added. “But it would be a disaster for Italy’s manufacturing industry to have to rely on foreign steel supplies.”
The investments needed to support the heavy CO₂ emitter’s green transition have been a sticking point between the Franco-Indian group, state investment agency Invitalia — which owns a stake in the steelworks — and Giorgia Meloni’s government.
ArcelorMittal bought the plant located in the southern city of Taranto in 2018 for €1.8bn from the state, which had placed it into special administration. The group has said it is not planning to invest further funds in the business over disagreements with Invitalia.
According to Gozzi multiple legal and political issues, including around the plant’s decarbonisation, have led to ArcelorMittal’s “complete disengagement”.
Under the European Green Deal targets, plants like the one owned by ArcelorMittal must become carbon neutral by the end of the decade.
Gozzi said 80 per cent of Italian steelworks had already shifted to electric furnaces.
But the ArcelorMittal plant has been plagued by scandals, environmental problems and legal cases that led to a drop in production, lay-offs and a supply chain crisis.
In 2023 the plant, which has a yearly capacity of 8mn tonnes, produced less than 3mn tonnes of steel. Its main furnace was forced to shut down in 2019 after a court ruled it did not meet minimum workplace safety requirements.
Gozzi said Italy cannot afford to give up on the ailing plant, which employs about 10,000 people. He mentioned uncertainty over delivery times and prices as risks that Italy’s manufacturing industry would face if it became reliant on foreign supplies.
The ArcelorMittal plant is the main steel supplier to Italy’s automotive industry, which includes the likes of Stellantis, Maserati and Ferrari.
“If the government were to fund two new direct reduced iron systems it could go back to producing 5mn tonnes per year,” Gozzi estimated.
The government has not commented on plans to fund the plant’s decarbonisation. Last week, industry minister Adolfo Urso said the government would support the plant’s suppliers who, it said, were owed about €180mn in unpaid invoices by the steelworks, a figure the company’s management contests.
Urso was also in touch with the country’s largest steel companies, including Arvedi and Marcegaglia, to discuss a potential takeover of the plant once it was in the hands of a special administrator, according to people close to the talks.
But last week ArcelorMittal sent the Italian government a letter demanding an amicable solution to the dispute, saying they were willing to remain as a minority investor.
“Of course it makes sense for them to find a solution, nobody wants this to end up in court,” said Gozzi.
Read the full article here
