* Insolvent Lucchini has recently begun idling capacity
* Up to 4,000 Lucchini jobs are at risk
* Pope Francis urges "creativity" in resolving its problems
* Its facilities could be sold for a symbolic 1 euro -
* Billionaire Jindal brothers competing for 2nd asset in
By Krishna N Das and Clara Denina
NEW DELHI/LONDON, April 30 India's billionaire
brothers, Naveen and Sajjan Jindal, could be the answer Pope
Francis is looking for.
Their companies, Jindal Steel and Power and JSW
Steel, are in competing talks to buy parts of
insolvent Italian steelmaker Lucchini, sources with direct
knowledge of the matter said.
Pope Francis earlier this month called for those in power to
use their "creativity" to resolve Lucchini's problems. Italy's
second-largest steelmaker has tried to sell itself for years but
has so far failed to attract investors, forcing it to recently
begin idling capacity and putting at risk up to 4,000 jobs.
With Italy still struggling to emerge from its longest
postwar recession and unemployment running at 13 percent, the
highest level since at least 1977, the shutdown of another piece
of industrial infrastructure would underline the deep problems
facing the euro zone's third-largest economy.
For the Jindals, Lucchini would give them an opportunity to
accelerate an expansion of their operations outside of India
where steel demand growth has been soft.
And they might not even have to fork out a fraction of the
$5 billion that Forbes said the Jindal family is worth; heavy
liabilities and a need to protect jobs mean Lucchini could be
sold for just one euro, Italian media reports say.
Formerly owned by Russia's Severstal, Lucchini was
declared insolvent in 2012 and later placed under "special
administration" - a procedure designed to save large firms and
avoid heavy job losses. It fell victim to the 2008 recession
that has cut Europe's steel demand by about a quarter.
Lucchini's main facilities include a 2.5
million-tonne-per-year steel complex in the Italian town of
Piombino equipped with a blast furnace, and a wire rod mill in
Lecco in the north of the country.
"Our interest is very preliminary as of now but they have
some mills that look interesting," said a source at Jindal
Steel. "I don't think we will be too keen on their blast
A second Jindal Steel source confirmed the company's
interest in the Lucchini facilities.
JSW too is looking at the properties and its senior
management could visit Italy next week, a company source and an
industry source told Reuters.
Mirko Lami, of Italian union CGIL FIOM, said that they have
been informally notified by Lucchini's special administrator
Piero Nardi about a meeting between JSW, Lucchini, the
government and the unions. But Lami did not know when the
meeting would take place.
A source close to Lucchini said the person had no knowledge
about a meeting taking place with JSW in coming days.
The sources could not say when a sale decision was likely
and that at least Jindal Steel has yet to appoint a financial
All the sources declined to be named because they are not
authorised to talk to the media. A Lucchini spokesman declined
comment while a Jindal Steel spokesman did not respond to a
request for comment.
A JSW spokesman when contacted said that "as part of its
growth strategy, the company looks to evaluate opportunities for
growth, both organically and inorganically".
COMPETING FOR DEALS
Apart from Jindal Steel and JSW, Swiss-based trader Duferco
had also shown an interest in the facilities before pulling out
last month. The world's top steel trader said it had decided not
to bid for the Piombino complex because it could not commit to
maintaining full employment and keeping the Piombino blast
Jindal Steel is controlled by lawmaker Naveen Jindal while
JSW's chairman is his elder brother Sajjan. JSW's No. 2
shareholder, Japan's JFE Steel, is the world's ninth-largest
JSW already owns a plate and pipe mill in the United States
while Jindal Steel earlier this week started a 2
million-tonne-per-year plant in Oman.
This is the second time in recent months that the brothers
have been pitted against each other on acquisitions, following
their rival bids to buy the Indian iron ore assets of UK trader
Stemcor. A deal on that has yet to materialise.
India's steel consumption inched up just 0.6 percent to
about 74 million tonnes in 2013/14, the lowest in four years,
according to the steel ministry. The brothers' new-found
interest in competing for assets reflects the market situation
and the strong desire to grow their empires, said analysts.
"In a growing competitive environment, both companies shall
be inevitably pitted against each other on asset sales
internationally," said Ashima Tyagi, senior consultant at
research and consulting firm InfralineEnergy.
(Additional reporting by Maytaal Angel in London; Editing by