Trending Now: ArcelorMittal cuts Taranto output on missed government deadline
Kallanish Steel | March 22, 2021
AM InvestCo, the ArcelorMittal subsidiary operating the former Ilva steelworks, has been forced to announce further production cuts at the Taranto site. ArcelorMittal is also temporarily slowing its investment plan for the troubled plant following the Italian government’s failure to provide funds within the agreed timeline, the group tells Kallanish.
ArcelorMittal signed last year a binding agreement with Italian state-owned company Invitalia to form a 50-50 public-private partnership to operate Taranto. Invitalia agreed to invest in AM InvestCo in two tranches. The first investment of €400 million ($476m) was to be made by 5 February 2021. The second tranche of up to €680m is payable on closing AM InvestCo’s purchase of Ilva, which is subject to various conditions being met by May 2022, at which point Invitalia’s shareholding in AM InvestCo would reach 60%.
“Despite the binding nature of the (investment) agreement, to date Invitalia has not paid its share capital and therefore has not fulfilled its obligations under the Agreement,” ArcelorMittal says. “This persistent failure to comply is seriously compromising the sustainability and prospects of the company and its employees.”
The production cut will remain in force for as long as Invitalia does not fulfil the commitments made under the investment agreement, the company adds.
The Italian government was not immediately available for comment.
At the end of last week, ArcelorMittal communicated to trade unions its intention to reduce to a minimum output at the Taranto site. According to unions, this would result in an immediate stop of activities at the steelmaking number 1 unit, hot rolled coil line number 2, the plate line, and the tubemaking line.
This is happening amid a serious coil shortage that continues to hamper Italian buyers’ ability to procure material, while prices remain elevated. ArcelorMittal has again raised its target price for coil products in northwest Europe. The company has told European clients that hot rolled coil offers will now reach €850/tonne ($1,014) ex-works, while galv will be offered at €970/t ex-works (see separate article).
HRC transaction values in Italy are approaching the level of €800/t base ex-works and 900-920/t for cold rolled and hot-dip galvanised coil, sources say.