Mittal Steel (NYSE:MT)
Historical Stock Chart
2 Years : From Sep 2012 to Sep 2014
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 email@example.com and Inti Landauro at Inti.Landauro@dowjones.com
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