UPDATE 2-ArcelorMittal takes axe to Belgian operations again

Thu Jan 24, 2013 9:34am EST

Related Topics

* Facility closure to affect 1,300 workers

* Five retained lines to keep on 800 workers in Liege

* European steel demand down 8-9 pct in 2012 (Adds Belgian PM, Socialist leader, further details)

BRUSSELS, Jan 24 (Reuters) - ArcelorMittal, the world's largest steel producer, plans to shut facilities at its site in Liege, Belgium, with the likely loss of around 1,300 jobs, due to a weakening of demand for steel in Europe.

The company said in a statement on Thursday it had decided to close permanently the coke mill and six finishing lines at the site after European demand for steel dropped 8-9 percent last year.

ArcelorMittal said in the first nine months of 2012, its Liege facility had made an operating loss of 200 million euros ($265.62 million), with no improvement seen.

Thursday's decision comes on top of the closure of two blast furnaces at Liege, announced in October 2011. The plant had employed 2,700 workers.

It is a further blow for Belgium after last October's announcement that Ford Motor Co would close its car plant in Genk, some 40 km (25 miles) north of Liege, by the end of 2014.

Belgian Prime Minister Elio Di Rupo said he had cancelled his planned trip to the EU-Latin America summit starting on Friday and would instead meet local government chiefs.

"I support the workers. It is my first message this afternoon during my meeting with (ArcelorMittal CEO) Lakshmi Mittal," Di Rupo tweeted from the World Economic Forum in Davos.

ArcelorMittal said it had offered to keep the six lines operating at between zero and 100 percent depending on market demand, but that unions had rejected this.

Union leaders said the company had failed to uphold a promise to keep the 'cold' operations such as steel rolling in Liege. In the 'hot' blast furnace stage iron ore is converted into steel.

"After the close of the hot phase in 2011, we sensed the cold phase could not last. They provided guarantees, but it was a complete lie," said Fabrice Jacquemart of FGTB Metal.

Paul Magnette, head of the French-speaking Socialists and a former minister, denounced ArcelorMittal's decision as "treachery."

Five specialised lines producing high quality product would be retained, with about 800 people kept on.

Liege in eastern Belgium was one of Europe's major iron and steel cities in the 19th century, and has been home to gunsmiths for centuries. More recently, some high tech firms have set up there. It is also the home of the sugar-coated Belgian waffle.

ArcelorMittal, struggling with European steel demand 29 percent below pre-crisis levels, also planned to shut two idled blast furnaces in Florange, France.

After a stand-off with the French government, the company agreed to invest 180 million euros in Florange and promised there would be no forced layoffs.

Last month ArcelorMittal said it would write down the value of its European business by $4.3 billion, or 87 percent, and earlier this month raised $4 billion in shares and convertibles to cut debt after losing its investment grade status.

The $500-billion-a-year steel industry, a gauge of the global economy, has slowed sharply this year as a moderation in China's economic growth has compounded weak demand from austerity-ravaged Europe.

Lakshmi Mittal has said he expects global steel demand to grow by between 2 and 3 percent this year, but sees European demand broadly flat. ($1 = 0.7530 euros) (Reporting by Robert-Jan Bartunek and Philip Blenkinsop; editing by James Jukwey)

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