* EC action plan on steel could include state aid
* Some groups are against public subsidy to sector
* Shrinking demand causes steel plant closures, job losses
By Francesco Guarascio and Silvia Antonioli
BRUSSELS/LONDON, May 10 The European Commission
(EC) is considering reopening a three-year-old case to examine
whether funds granted by the Wallonia region of Belgium to steel
company Duferco were illegal state subsidies, a commission
There is heated political debate over the industrial policy
the EU should undertake to help the steel sector, which faces
plant closures and job losses.
While the EC competition department is looking into the
legality of the funds given to privately owned Duferco group,
other departments of the Commission are drawing up an action
plan that could introduce state aid to the steel sector.
"The Commission is studying the case of a possible
concession of illegal state subsidies from the Belgian public
authorities to the steel group Duferco, in particular to
branches of the group based outside the EU," said the source at
No formal investigation has been opened as yet.
A Commission spokesman declined to give an immediate
Duferco, one of the world's largest steel trading and
producing firms, said it has not been officially notified of the
EC intention to reopen the file so far.
Duferco chief executive Antonio Gozzi, who is also head of
Italy's steelmakers body Federacciai, said the file, first
opened in 2010, concerns years of partnership between the
Walloon authorities and the group, including loans and stakes in
He added that in one instance, Wallonia had bought a stake
in a Duferco steel rolling mill in the United States as a
guarantee on a loan it had previously granted to Duferco for
investment in Belgium.
"All operations between Duferco and the Walloon government
were regular market transactions where the government has been
paid back and at a market interest rate," Gozzi said.
Earlier this year Duferco closed its steel production site
at La Louviere, in Belgium, due to difficult market conditions.
It is one of many firms forced to close their steel
production facilities due to shrinking demand in Europe.
French speaking Wallonia has an unemployment rate about
twice the level of Flanders in northern Belgium, partly because
it was a significant steel producer and suffered from heavy
To try to avoid further closures and their social
consequences the EC is drafting an action plan, which introduces
new measures of support to the sector, including the freezing of
energy taxes for steel plants in Europe.
Some groups within the commission however are against the
introduction of public aid measures to the sector.
"It is quite a coincidence that after three years from when
it was first opened this file is now back under the spotlight
just at a time when there is a political debate over the EU
industrial policy," Gozzi said.
(Editing by Veronica Brown and Anthony Barker)