June 4 (Bloomberg) -- The Italian government said it will put steelmaker Ilva SpA under special administration after a widening environmental probe put Europe’s largest steel plant at risk.
The closure of the steelmaker would be “an enormous shock” for the Italian economy, even in terms of jobs, Industry Minister Flavio Zanonato said at a press conference in Rome today. Prime Minister Enrico Letta plans to name Enrico Bondi special administrator for one year, with the possibility to extend his mandate for another two years, Zanonato said.
Magistrates in July last year ordered the partial closure of Ilva’s Taranto plant in southern Italy, Europe’s largest. Top executives, including Emilio Riva, chairman at Ilva’s owner Gruppo Riva SpA, were arrested on suspicion they knowingly neglected environmental controls at the plant contributing to high cancer rates in the area. Milan-based Riva denies responsibility for health issues in the region.
Italy’s government approved a decree in November to keep the plant operating, subject to a 3 billion-euro clean-up by the company. The impact from the plant shutdown would be 8 billion euros ($10.4 billion), Zanonato reiterated at a hearing in Parliament today. The Environment Ministry said yesterday the company hasn’t so far implemented all the measures required to comply with health standards.
The company’s board resigned May 25 over the seizure of 8.1 billion euros ($10.6 billion) of assets belonging to the Riva family. Ilva said it would mount a legal challenge to the asset seizure.
The asset seizure threatens the company’s capacity to continue production and could send the situation at the plant “out of control,” with repercussions for 20,000 employees, the family’s holding company Riva Fire said in a statement May 27.
Ilva accounts for 30 percent of Italy’s steel production and generates 75 percent of the province of Taranto’s gross domestic product, according to the company’s website.
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