Luxembourgish trade unions have reacted to the news, accusing ArcelorMittal of hiding behind a strategy to collapse the deal.
As ArcelorMittal explained, a clause in the sale did account for the withdrawal in the event of such a law impeding the operation of the site. Nevertheless, the steel giant stressed that the sale of the steel works in Dudelange to Liberty Steel in July 2019 would not become retrogressive.
The OGBL's Jean-Claude Bernardini described the entire situation as appearing to be "a cheap restructuration for ArcelorMittal." He pointed out that the steel giant sold a number of sites in which it was least interested and gained a huge amount from the sales. Additionally, Bernardini accused ArcelorMittal of using the withdrawal to pressure the Italian government in order to keep the deal alive, albeit under ArcelorMittal's conditions. Bernardini was equally critical of the European Commission's role in the matter, a point echoed by the LCGB's Robert Fornieri.
Fornieri termed the situation the "European Commission's shame." Pointing out that the decision to sell six sites alongside Dudelange was made on a basis that has now collapsed, he added that the Liberty House decision remained unchanged.
Both trade unions have battled ArcelorMittal on the fate of the Dudelange site for a year now and added that the employees at the site have been living without job security during that time. Liberty Steel has, as promised, not cut any jobs, but has yet to announce investments in the site.
As a reminder, ArcelorMittal sold seven sites in order to purchase Ilva, but the Italian steel group has now pulled out of the deal. Upon inquiry, ArcelorMittal confirmed it would have rented Ilva sites until 2023 before becoming the owner. Already, the group has invested in sites and rent, notably in storing infrastructure and raw materials. It is as of yet unclear whether there will be any compensation for ArcelorMittal.
The Luxembourgish steel producer did not provide any other precisions to the matter. The background to the entire situation is that the Italian parliament amended the legal framework and judicial protection for the management of an Ilva site in southern Italy. As written in the press release, "the Italian Parliament has removed the legal protection necessary for the Company to implement its environmental plan without the risk of criminal liability, thus justifying the withdrawal notice."
10,000 jobs are now at risk at the Taranto plant. The Italian Prime Minister Giuseppe Conte met with ministers on Monday evening to discuss the situation.
AM InvestCo Italy sends withdrawal and termination notice from the lease and purchase agreement for Ilva business4 November 2019, 13:35 CET
Today, AM InvestCo Italy (‘the Company’) sent to Ilva’s Commissioners a notice to withdraw from, or terminate, the agreement (‘the Agreement’) for the lease and subsequent conditional purchase of the business of Ilva S.p.A. and certain of its subsidiaries (‘Ilva’), closed on 31 October 2018.
The Agreement stipulates that, in the event that a new law affects the environmental plan for the Taranto plant so as to materially impair the ability to operate it or to implement its industrial plan, the Company has a contractual right to withdraw from the Agreement. Effective on 3 November 2019, the Italian Parliament has removed the legal protection necessary for the Company to implement its environmental plan without the risk of criminal liability, thus justifying the withdrawal notice.
In addition, the decisions issued by the criminal court of Taranto bind the Ilva extraordinary Commissioners to complete certain prescriptions by 13 December 2019 – a term the Commissioners themselves deemed impossible to meet – failing which blast furnace number 2 will be shut down. Such prescriptions should also reasonably and prudentially be applied to the other two blast furnaces at the Taranto plant. The shutdown would make it impossible for the Company to implement its industrial plan, operate the Taranto plant and, generally, perform the Agreement.
Other serious occurrences, independent of the Company’s will, have also led to a situation of legal and operational uncertainty that has further significantly impaired the ability to carry out the necessary operations at Ilva and operate the Taranto plant.
All the mentioned circumstances also entitle the Company to terminate the Agreement under the applicable provisions and principles of the Italian Civil Code.
In accordance with the content of the Agreement, the Company has asked the extraordinary Commissioners to take responsibility for Ilva’s operations and employees within 30 days from the receipt of the notice of withdrawal and termination.
