French minister races to save symbolic steel plant

PARIS Thu Sep 27, 2012 6:11am EDT

General view of the ArcelorMittal steel plant in Liege September 18, 2012. REUTERS/Francois Lenoir

General view of the ArcelorMittal steel plant in Liege September 18, 2012.

Credit: Reuters/Francois Lenoir

PARIS (Reuters) - A French minister raced on Thursday to the last blast furnaces in the Lorraine region, once the heart of the nation's steel industry, after a report that the idled plant would close in a blow to the Socialist government's fight against unemployment.

Industry Minister Arnaud Montebourg headed to the Florange site after Liberation newspaper said its owner ArcelorMittal (ISPA.AS) had decided to close a plant which became a symbol of France's industrial decline during campaigning for May's presidential election.

The newspaper said President Francois Hollande's government was negotiating to buy the two blast furnaces - idled since last year due to weak international demand - for a single euro so that it could then seek a company willing to operate them.

A spokeswoman for Montebourg, whose official title is Minister for Industrial Renewal, confirmed talks were taking place with the company but declined to comment on their content.

"The negotiations started three weeks ago and they continue today," she told Reuters, adding that their aim was "to guarantee the industrial future of the whole of the site".

There was no immediate comment from ArcelorMittal.

In a blow to Hollande, unemployment passed the psychological 3 million mark in August, its highest level since June 1999, figures showed on Wednesday.

The Florange plant is the last survivor in the once bustling northeastern steel region after the neighboring ArcelorMittal mill of Gandrange was wound down, despite former President Nicolas Sarkozy's promise to protect it.

UNIONS DEMAND END TO "BLACKMAIL"

Hollande had slammed Sarkozy's record on job creation during his successful campaign for the presidency, vowing to revive an industrial sector which lost 750,000 jobs in the past decade.

The president, whose popularity has nose-dived since the May election, has staked his reputation on reversing the upward trend in unemployment by the end of 2013 using state-sponsored job plans, industrial investment and labor market reforms.

Labor Minister Michel Sapin said on Wednesday the government was also still discussing a law which would impose tough penalties on profitable companies which laid off workers just to boost their margins.

Several major companies have announced big layoffs in recent weeks including carmaker Peugeot (PEUP.PA), retailer Carrefour (CARR.PA) and pharmaceutical firm Sanofi SAYS.PA. Business leaders complain that high taxes and social charges are eroding France's competitiveness.

A government report in July concluded that Florange remained economically viable as a steel-producing site, provided it received appropriate modernization and investment.

Union leaders, who were due to meet with Montebourg on Thursday, warned that it would be "suicidal" for the minister to come to Florange only to announce the closure of the plant.

"An adviser to Montebourg told us he would only come if he had something positive to announce. We hope he has something more reassuring to say than what we heard this morning," said Edouard Martin, a leader of the CFDT union.

"We are going to tell him to keep fighting, so that ArcelorMittal understands the policy of blackmail it has used in Europe for years has come to an end," Martin said.

(Reporting by Daniel Flynn and Yann Le Guernigou; editing by James Jukwey and David Stamp)