Nov. 30 (Bloomberg) -- ArcelorMittal won’t go ahead with planned job cuts at its Florange steel mill in northeast France and will invest 180 million euros ($234 million) in the plant over the next five years, French Prime Minister Jean-Marc Ayrault said.
In a televised statement this evening, Ayrault said the government was dropping its threatened nationalization of Florange because of ArcelorMittal’s commitments.
“The government has shown its ability to intervene to find positive outcomes for jobs and investment,” Ayrault said. “ArcelorMittal’s engagements are unconditional, and the government will take all steps necessary in the case of non-compliance.”
President Francois Hollande had given Lakshmi Mittal, the chief executive officer and biggest shareholder of the world’s largest steelmaker, until tomorrow to either keep the 600 threatened jobs at the plant, sell all of it or face its nationalization. Industry Minister Arnaud Montebourg said a week ago that Mittal is no longer wanted in France, setting up the most bitter standoff between the French government and a company since Hollande was elected six months ago.
Some union leaders said they weren’t satisfied with Ayrault’s announcement. “It’s not what we expected from a Socialist government,” Frederic Maris, a representative of the CGT union, said in a live interview on BFM television. “We were expecting a new buyer or a nationalization. We don’t want to see ArcelorMittal any more. It’s a huge disappointment.”
Hollande met with Mittal three days ago to discuss the site in northeastern France. The complex includes two blast furnaces, which Mittal wants to close, as well as a rolling mill producing steel, notably for the car industry, which he wants to keep. Across France, ArcelorMittal employs about 20,000 people.
Ayrault said low steel demand in Europe ruled out the immediate re-opening of the two blast furnaces. ArcelorMittal agreed to keep them mothballed for a carbon capture plan being worked on by the European Union, the prime minister said.
The government’s earlier pronouncements about nationalizations and ArcelorMittal not being welcome had a disastrous impact on France’s image, said Laurence Parisot, the head of the French employers’ association, Medef.
“I was in Hong Kong this week and can tell you investors don’t understand France anymore,” she told RTL radio yesterday. “Planning to nationalize, starting a debate on it, is scandalous. One should remember that nationalization is expropriation.”
Mittal has faced hostility from politicians since he entered France with his 36 billion-euro acquisition of Arcelor in 2006, and he also clashed with Hollande’s predecessor Nicolas Sarkozy over planned job cuts.
Since taking office in May, Hollande has sought to limit job cuts at carmaker PSA Peugeot Citroen and has searched for a buyer for a Petroplus Holdings AG refinery in France.
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