By Alex MacDonald and Inti Landauro
The chairman and chief executive of ArcelorMittal (MT), the
world's largest steelmaker, promised to maintain jobs linked to a
French steel plant at the center of a dispute with the French
government regarding potential nationalization
"We will continue to produce steel of the highest quality in
France," Lakshmi Mittal said in a letter to workers, a copy of
which was seen by Dow Jones Newswires. "We will work to show our
stakeholders in France that we are a company that keeps to its
commitments."
The French government and the Luxembourg steelmaker reached an
agreement at the eleventh hour Friday following weeks of
brinksmanship over the fate of the plant's two blast furnaces. The
two furnaces were deemed to be uneconomical due to a protracted
downturn in European steel demand and excess production capacity in
the European Union.
The French government and ArcelorMittal agreed Friday to avoid
compulsory redundancy regarding some 600 threatened jobs . It also
agreed to invest at least EUR180 million in the plant over a
five-year period and said the future of its blast furnaces would be
linked to an EU carbon and capture-storage program. Mr. Mittal said
in the letter the steelmaker wouldn't dismantle the furnaces over
the next six years.
But French ministers weren't convinced ArcelorMittal would keep
its promise. Mr. Mittal denounced the French government's use of
"anticommercial" language and said he was "confident" the French
authorities wouldn't pursue nationalization, as it had initially
threatened to do.
The European Commission on Thursday said ArcelorMittal withdrew
a request to secure funding for its ultralow carbon dioxide
steelmaking project at Florange due to technical difficulties, but
the steelmaker said it was still committed to pursuing the project.
The decision to withdraw its application for a subsidy was
disclosed as part of the agreement struck with the French
government over Florange.
In a July report, the French government said it would provide
EUR150 million to Florange for the ULCOS project while local
councils would provide EUR30 million in funding.
But the report noted that the ULCOS project is "not currently
profitable in an economical point of view" given that the CO2 price
had fallen to EUR7 a metric ton in July, compared to EUR20/ton when
the project was originally drafted.
The report estimated the EU could finance the project with
around EUR263 million. The subsidy from the EU would come as
reimbursement after the project starts up so ArcelorMittal would
have to invest the money first.
--Marion Issa in Paris contributed to this article.
Write to Alex MacDonald at alex.macdonald@dowjones.com and Inti
Landauro at Inti.Landauro@dowjones.com
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