ArcelorMittal signs deal to suspend plans to exit Ilva steelworks

MILAN (Reuters) - ArcelorMittal MT.AS said on Wednesday it had signed a deal that would see a significant injection of Italian state funding into the Ilva steelworks and would suspend a bid to walk away from the troubled plant, which it took over in 2018.

FILE PHOTO: The Ilva steel plant is seen in Taranto, Italy, November 11, 2019. REUTERS/Ciro De Luca/File Photo

The accord provides a respite in the four-month dispute that has seen ArcelorMittal threatening to hand back Ilva to the government after disagreements over plans to rescue the plant that was losing 2 million euros ($2.2 million) a day last year.

The deal will see Rome taking an equity stake at least equal to Arcelor Mittal’s remaining liabilities against the original purchase price for Ilva.

If the agreement is completed, the original lease and purchase agreement under which ArcelorMittal, the world’s biggest steelmaker, took over Ilva will close by May 2022.

However final settlement will depend on a new investment plan being executed by November 30. Otherwise ArcelorMittal said it could withdraw from the deal subject to an agreed payment.

The future of the plant has been a headache to successive Italian governments, which have struggled to balance the need to clean up the polluted site in the southern city of Taranto and that to safeguard thousands of jobs in the underdeveloped south.

Last year, ArcelorMittal announced it was pulling out of the 2018 takeover agreement after parliament scrapped a guarantee of legal immunity from prosecution over environmental risks during a clean-up of the heavily polluting factory.

In response, the Ilva commissioners requested an injunction to block the move in a case that was scheduled to be heard in a Milan court on Friday but which will now be dropped..

Under the investment plan, Ilva will invest in lower-carbon steelmaking technologies, with a DRI (Direct reduced Iron) facility to be built, funded and operated by outside investors, and an EAF (Electric Arc Furnace) to be built by ArcelorMittal.

Italian trade unions criticized the accord which it said left key questions open on the future of a plant that employs more than 8,000 workers with thousands more dependent as suppliers or contractors.

“There is a total unknown on ArcelorMittal’s financial commitment in the new company,” the Cgil, Cisl and Uil unions said in a joint statement.

“This agreement only resolves legal disputes but does not provide answers on the main nodes of the group’s plants”, Rocco Palombella, head of metalworkers’ union Uilm.

Reporting by Emilio Parodi; editing by James Mackenzie