French PM defends policy on ArcelorMittal

PARIS, Feb 15 (Reuters) - French Prime Minister Francois Fillon has defended the government's policy towards a steelworks owned by ArcelorMittal (ISPA.AS: Quote, Profile, Research, Stock Buzz), saying the state has the right to intervene in strategic sectors of the economy.

ArcelorMittal, the world's largest steelmaker, plans to close its Gandrange plant in northeast France by the start of 2009, which would result in 600 job cuts.

President Nicolas Sarkozy has said the state is ready to fund part or all of any necessary investment to keep the site running.

"Our country must not allow certain strategic sectors to disappear if it is going to maintain its industrial base," Fillon said in an interview to appear on Saturday in Le Figaro magazine.

"All the big liberal states around us have a policy of huge state intervention. When the U.S. president ... leads an extremely offensive policy to prop up Boeing through huge military contracts, this is an industrial policy," he said.

"France has the right to use the same instruments as its neighbours," he said. "Everybody finds it normal for the state to have its say on questions of energy. The question of steel is strategic for us (too)."

ArcelorMittal says its decision is based on profitability issues. Gandrange produces 900,000 tonnes of steel per year.

Fillon said the government would try to persuade ArcelorMittal to revise its plans. "If that is not the case, we will seek ways of maintaining production levels," he said. (Writing by Richard Balmforth, editing by Leslie Gevirtz)