PARIS: A mammoth battle of brinkmanship could leave the world’s top world steelmaker ArcelorMittal hobbled and damage France’s business climate if the government is forced into following through on its threat to nationalise one of the company’s plants.
The showdown between France and Indian-born steel tycoon Lakshmi Mittal could reach a climax this weekend as a deadline the company set for the government to find a buyer for two outdated blast furnaces expires.
The dispute pits a debt-saddled ArcelorMittal which has been trying adjust to a sagging steel market against a new Socialist government which wants to improve industrial competitiveness but has also vowed to protect jobs as unemployment climbs.
ArcelorMittal announced on October 1 that it plans to permanently close two blast furnaces at its Florange plant in the eastern Lorraine region that the company regards as uneconomic in two months if the government doesn’t find a buyer.
The French government says it has potential buyers, but only for the entire Florange site which has facilities which ArcelorMittal wants to keep. The French government has threatened to temporarily nationalise the entire site to protect the 650 jobs on the line in order to sell it on to the buyer, whose identity it has not revealed and which French media have speculated could be Russian.
ArcelorMittal has warned that nationalisation of the plant would cast doubt on the future of all its operations in France, where it employs 20,000 people.
President Francois Hollande himself dangled the threat in talks with the billionaire, ranked 21st in the Forbes list of the world’s wealthiest people.
Talks were ongoing. And although no progress was apparent, ArcelorMittal and the government appeared ready to continue talks past the deadline.
Backing down on closing the blast furnaces and cutting staff could prove damaging to Arcelor Mittal, which plunged into a quarterly net loss of $709m in the period from July to September on sliding demand from China.
The company said its priority was to reduce its debt, which is expected to rise to $22bn by the end of the year, but nevertheless Moody’s downgraded the company’s credit rating to junk status, which will likely make it more costly for the company to borrow.
AFP
