* Midnight deadline for accord could be extended-sources
* Deal could avoid nationalisation, save face for Hollande
* Foreign investors seen unnerved by Montebourg rhetoric
PARIS, Nov 30 The French government and
steelmaker ArcelorMittal are aiming to clinch a deal
to save jobs and avoid a temporary nationalisation of its
Florange steelworks, government sources said on Friday as a
midnight deadline neared.
ArcelorMittal says the site's two furnaces are not viable
but Socialist President Francois Hollande wants them kept open
and has threatened a controversial state takeover for the site
in northeastern France if no private buyer is found.
The two furnaces together employ 600 workers with the entire
site providing work for 2,700. Sources close to Hollande said
talks could stretch beyond the deadline set for an accord by
ArcelorMittal, but no comment was available from the company.
"My aim is to find a long-term solution in terms of both
jobs and activities for the Florange site," Hollande told
reporters on a trip just outside Paris late on Thursday,
declining to give details of how a compromise could emerge.
A deal this weekend could bring concessions from both
parties, including promises from ArcelorMittal to offer new jobs
to all workers affected by a shutdown of the furnaces and large
new investments in France, Les Echos business daily reported.
The compromise could save face for Hollande's government,
which is struggling to stem a glut of industrial layoffs and has
faced criticism this week from business leaders over its threat
to nationalise Florange.
Alternatively the state could carry out plans to acquire the
whole site with a private co-investor and seek to revamp the
idled furnaces using European Union credits to produce
environmentally friendly steel, Les Echos added.
Industry Minister Arnaud Montebourg, who shocked foreign
investors this week by saying Arcelor's Indian CEO Lakshmi
Mittal was not welcome in France, has said an unnamed
industrialist was ready to inject 400 million euros into the
Edouard Martin, head of the CFDT trade union's Florange
chapter, said he hoped a new owner would come forward.
"In the long term, I don't think having Mittal in charge is
an ideal scenario," he told LCI television in front of French
parliament, where metal workers are protesting.
French officials have defended a temporary nationalisation
of Florange, saying it is a special case because ArcelorMittal
has broken its promises to keep the furnaces running.
But ArcelorMittal denies breaking commitments. Sources close
to the group say Arcelor planned in 2003 - before its 2006
takeover by Mittal - to wind down inland blast furnaces in
Europe, including the two in Florange, by 2010.
They argue that overcapacity in Europe's steel market, with
demand 28 percent below peak 2007 levels, has made Florange's
furnaces unviable and that a buyer would have to absorb deep
losses to take them on, even with the rest of the site.