June 27, 2018 / 5:44 PM / a month ago

Italy delays handover of Ilva steelworks to ArcelorMittal

ROME (Reuters) - Italy’s new government has postponed its planned handover of the heavily polluting Ilva steel plant, Europe’s largest, to ArcelorMittal by two and a half months to Sept. 15 as Rome seeks more time to rejig the terms of the deal.

The plant in southern Italy has been under state-supervised special administration since 2015, after magistrates said it must be cleaned up or closed. ArcelorMittal, the world’s largest steelmaker, agreed last year to buy it and fix the problems.

ArcelorMittal was due to take over Ilva on July 1, but Industry Minister Luigi Di Maio, whose party has long campaigned to close the plant, said on Tuesday evening the handover would be delayed.

“I am evaluating every possible impact related to the decisions I will have to make. Impact in environmental, social, economic and employment terms”, Di Maio said in a statement.

Di Maio said Ilva would not need a bridge loan to cover its production costs in the coming months.

In a statement, ArcelorMittal said delaying the handover was a possibility foreseen by the contract signed with the Italian government.

“ArcelorMittal confirms its determination to relaunch Ilva from an industrial, environmental and social point of view,” the statement said. The company also said it was committed to seeking an agreement with labor unions.

The industry minister is the head of the 5-Star Movement, which governs in coalition with far-right League. 5-Star has campaigned for years to close Ilva, but rather than tear up the deal with ArcelorMittal, it has begun talks with business leaders, local officials and trades unions.

The discussions point to the kind of compromise 5-Star will have to make with the pro-business League — which wants the plant to remain open — to maintain their partnership.

Ilva has been dogged by charges of corruption and environmental crime for years, charges that it denies.

In 2012, Italian authorities ruled that emissions from the plant had caused deaths, tumors and respiratory diseases. The state took full control in 2015 and about half Ilva’s annual 11million-tonne capacity was eventually mothballed.

ArcelorMittal reached a 1.8-billion-euro deal with the previous Italian government to buy the troubled steelmaker. It pledged to invest another 2.3 billion euros to clean up and modernize the plant but said it wanted to cut 5,500 jobs out of a total of 14,000 by 2023.

The Indian steel giant has still not reached an agreement with unions on job cuts it could agree to and a delay could help it find a compromise with Rome’s help, one of the sources said.

At the March 4 general elections, the 5-Star movement won almost 50 percent of the plant’s host city, Taranto, one of the strongest showings for the movement anywhere in Italy.

“We intend to honor those extraordinary results,” Di Maio said. “Each decision will be taken with responsibility”.

Reporting by Massimiliano Di Giorgio, additional reporting by Maytaal Angel in London and Steve Scherer in Rome; writing by Giselda Vagnoni; Editing by Mark Bendeich and Elaine Hardcastle

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