ArcelorMittal strikes deal with French Govt
LONDON, DEC 1:
Following discussions with the French Government ahead of a midnight deadline, ArcelorMittal has struck a deal over the future of two blast furnaces at its plant in northeastern France, averting recent threats of temporary nationalisation.
ArcelorMittal will invest €180 million (Rs 1,270 crore) in the Florange site, and has pledged to make no compulsory redundancies, French Prime Minister Jean-March Ayrault had announced late on Friday, according to Reuters.
While, the furnaces, which were idled in June and October last year, will not be restarted, they will not be permanently closed as ArcelorMittal had originally intended.
“The Government decided against the idea of a temporary nationalisation that was floated in recent days,” Ayrault was quoted by Reuters as saying.
Temporary nationalisation
Tensions have mounted over the past few days following controversial comments made by French Industry Minister Arnaud Montebourg, who told financial daily Les Echos earlier this week that the company had reneged on the commitments it had made, and that the Government would consider temporary nationalisation until a buyer could be found, as a measure to preserve the 629 jobs that would be lost were the two blast furnaces to be closed.
The possibility of nationalisation was reiterated by President Francois Hollande, following a meeting with ArcelorMittal Chairman Lakshmi Mittal on Tuesday.
While the threat provoked an outcry by those fearful that it would tarnish France’s image, few believed that the Government would act on its threat, seeing it more as a response to public fears about mounting job losses in the country’s industrial heartland.
“I think Hollande realises that nationalisation would be catastrophic for the country, and FDI,” IHS Global Insight analyst James Goundry said ahead of the announcement.
During the merger back in 2006, ArcelorMittal said it intended to continue with the restructuring plan being pursued by the previous owners, which would have resulted in the closure of the Florange blast furnaces.
Closure of blast furnaces
The company subsequently shelved the closure plans, but following further weakness in the market, the company announced that it would idle the two blast furnaces last year.
Two months ago, it said it would be closing the two furnaces permanently, but agreed to give the government two months to find a buyer for the assets. The company plans to keep the remainder of the site, employing some 2,000 people, as an automotive hub, and has rejected the French Government calls that it consider the sale of the entire site.
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