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UPDATE 1-EU prepares plan to revive European steel
February 12, 2013 / 3:50 PM / 5 years ago

UPDATE 1-EU prepares plan to revive European steel

* EU Commission to produce action plan by June

* Energy, labour cost, climate change challenges

* European steel demand seen dropping further in 2013

* ArcelorMittal says cannot delay restructuring

By Philip Blenkinsop

BRUSSELS, Feb 12 (Reuters) - EU ministers and the European Commission urged ArcelorMittal on Tuesday to postpone planned capacity cuts until they firm up proposals to reinvigorate Europe’s steel sector.

Industry Commissioner Antonio Tajani said the world’s largest steelmaker should delay restructuring in Europe until the Commission produced an action plan by June.

His appeal, after a roundtable with 13 EU ministers, union members and industry chiefs, was echoed by French Industry Minister Arnaud Montebourg and counterparts from Belgium and Luxembourg.

ArcelorMittal plans to close all but a few specialised lines at its plant in Liege, Belgium, and has idled two blast furnaces at Florange in France. It has also extended indefinitely the closure of its electric arc furnace in Schifflange, Luxembourg.

The company, with 98,000 workers in Europe said it could not delay its plans, given substantially reduced European demand.

“Failing to take action in response to this will only serve to weaken the company in Europe, thereby threatening the viability of other plants,” it said.

The roundtable panel agreed on a range of recommendations covering trade, raw materials, climate change and energy policy to revive European steel, which employs 360,000 people in the bloc.

Steel consumption in austerity-hit Europe fell by 9.7 percent last year, according to Eurofer, the European steel producers’ lobby.

The demand, including inventory adjustments, is seen down 0.7 percent this year before a 3.0 percent rise in 2014.

Even then, the 146 million tonnes of steel consumed would be 27 percent below the pre-crisis peak level of 2007.

ENERGY, EMISSIONS CHALLENGE

Demand beyond Europe in emerging economies is stronger, but the European industry has argued it is being driven out of the European Union by excessive regulation and rising costs.

It faces higher energy costs than the United States where shale gas has provided abundant cheap energy and says the European Union’s environmental ambitions risk simply driving pollution elsewhere.

The EU aims to reduce carbon emissions by 20 percent relative to 1990 levels by 2020 and push for far deeper cuts by mid-century, a more ambitious agenda than other countries or regions.

“If companies move beyond the EU’s borders there is a problem for workers and also for the fight against climate change,” Tajani told a news conference.

However, Commission colleague Connie Hedegaard, responsible for climate action, said complying with EU carbon emission policy was a minimal cost for industry, with some actually earning millions of euros from trading allowances.

Wolfgang Eder, who heads Austria’s Voestalpine and Eurofer, said European producers were struggling with gas prices four times higher than in the United States and electricity some 40 percent more, along with higher labour costs and stricter climate targets.

“If the cost structure is not radically corrected down in the next five years, then I see there being 50 percent less production here by 2030,” he said.

Producers in Russia, Ukraine and Turkey were putting pressure on EU counterparts, particularly for more mass-produced steel grades.

Eder said the EU discussions would not lessen the outside threat, but showed there was agreement on an agenda and the desire to find solutions before the summer. (Editing by William Hardy)

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