ArcelorMittal offers amicable solution to Italy amid steelworks struggles
Jan 22, 2024
New Delhi [India], January 22 : To resolve the challenges surrounding the Acciaierie d'Italia (ADI) steelworks, ArcelorMittal, the major stakeholder, is prepared to either sell its stake or become a minority shareholder. Aditya Mittal, the company CEO, conveyed this in a letter to Italian Prime Minister Giorgia Meloni.
According to S&P Global Commodity Insights (GCI), the move comes as the Italian government signalled its intention to place the mill under special administration.
Mittal expressed the company's commitment to an 'amicable solution' and proposed selling its entire stake to Invitalia for a fraction of its cash investment.
This offer remains on the table, as stated in the letter, despite Invitalia initially refusing.
Additionally, ArcelorMittal is open to staying on as a minority strategic partner, providing technical and industrial expertise in collaboration with Invitalia.
"Although Invitalia has refused, this offer remains on the table should the government wish to consider it. Alternatively, "if the preference is for ArcelorMittal not to exit immediately, that too can be accommodated. We are prepared to remain as a minority strategic partner providing technical and industrial expertise for the joint venture with Invitalia as the Italian government decides on a permanent solution", Mittal said in the letter.
The steel giant has been grappling with financial concerns, marked by record-low production of around 3 million mt of crude steel in 2023 at its Taranto mill, well below the estimated breakeven point of 6 million mt. Presently, the company operates with only two blast furnaces, contributing to the urgency of finding a resolution.
While Mittal's offer appears to have avoided immediate legal action between ArcelorMittal and the Italian government, uncertainties linger over whether Invitalia will accept the majority stake or if the government will opt for special administration while seeking a new private investor.
The Italian government has proposed a bridge loan of Euro 320 million, emphasizing the need for a timely resolution within the next two weeks to address financial obligations such as supplier payments, raw materials, and utility bills. ArcelorMittal owns 62 per cent of Austempered ductile iron (ADI), while Invitalia holds the remaining 38 per cent.
The steelmaker acquired ADI in 2018, following its special administration in 2015.
