Hollande Presents Mittal Nationalization Among Site Options
Hollande, who met with Mittal for an hour at the Elysee presidential palace in Paris late yesterday, said in an e-mailed statement that he asked Mittal to pursue discussions with the government until the Dec. 1 deadline given to the company to find a buyer for the site at Florange in north-eastern France. The statement didn’t say what options were discussed.
“We want to ensure the continuing operation of the site,” Hollande said at a press conference before his meeting with Mittal, adding that its nationalization “will be part of the discussions. That concerns only the site itself, of course, and not the whole group.”
The three options presented to Mittal are retaining all jobs at the plant, selling the whole site or its nationalization, said a government official, who declined to be named in line with internal policy. Mittal, who wants to keep the downstream parts at the plant, has been opposed to the sale of the whole site. Hollande may meet again with Mittal at the end of the Dec. 1 deadline, the official said.
French Industry Minister Arnaud Montebourg, who first raised the possibility of its nationalization, sparked a furor after he told Les Echos newspaper on Nov. 26 that “we don’t want Mittal in France any more.” Montebourg accused the Indian CEO of going back on his word to protect jobs and said the Florange site could be put under temporary state control.
“Montebourg’s comments on Mittal are rarely what we hear from ministers,” said Yves Marcais, an equity sales trader at Global Equities in Paris. “The word nationalization hasn’t been used in France since former President Francois Mitterrand in the early 1980s. The legitimacy here is that there are jobs they want to save.”
A group of Florange workers have come to Paris and plan to hold a small demonstration in front of the National Assembly to show support for Montebourg’s action, according to the CFDT labor union.
Mittal’s family told Le Monde it was “extremely shocked” by Montebourg’s comments. The 62-year-old steel tycoon lives in London and is the world’s 41st richest man, with a net worth of $17.1 billion, according to the Bloomberg Billionaires Index. His company bought Arcelor SA in a hostile bid in 2006, after promising not to cut jobs and shift or cut investments.
Former President Nicolas Sarkozy signed off on the deal. Luxembourg-based ArcelorMittal now wants to close the furnaces at the site and slash more than 600 jobs, blaming a slump in the steel industry.
ArcelorMittal shares were 0.7 percent lower at 11.40 euros as of 5:06 p.m. in Amsterdam. The shares have fallen more than 19 percent this year.
“We are not talking about nationalizing everything,” Finance Minister Pierre Moscovici said today on Radio Classique. “Let’s not generalize and take this with a lot of pragmatism.”
Although Montebourg toned down his remarks to say he is just opposed to “Mittal’s method” of not honoring the commitments he made to France, his comments are the first sign the government will hold industrial companies to commitments on jobs and long-term investments, said Karine Berger, a lawmaker from Hollande’s Socialist Party.
“Mittal is a symbol,” Berger said in an interview. “He’s a symbol of the failure of Sarkozy’s policies, and a sign that an industry minister can intervene. It would have been better to have sold Arcelor to Europeans.”
Florange is a plant located in the Lorraine region of France, making steel slabs, coils and plated sheets. The plant’s long-simmering conflict started in 2002 when it was being considered for a shutdown -- before Mittal Steel Co.’s takeover.
The Florange plant belonged to Sollac, which was merged into state-owned steelmaker Usinor-Sacilor (MT) in 1990. The group was privatized in 1995 and in turn merged with Luxembourg steelmaker Arbed and Spain’s Aceralia in 2001 to form Arcelor, which was bought by Mittal in 2006.
The government asked Mittal to find buyers for the site, with the two-month period for such a move ending on Dec. 1. While Montebourg claims to have potential buyers, none have been identified so far. Today, he told the National Assembly that the state has an offer for the site from a steelmaker which plans to invest 400 million euros at the plant.
Berger said that Hollande’s government wants to mark a break from former Socialist Prime Minister Lionel Jospin, who famously said in 1999 that “you can’t expect the state to do everything.”
The last Socialist leader in power, Jospin, who headed the government from 1997 to 2002, told Michelin SA workers the state couldn’t help prevent the 7,500 job cuts the tiremaker planned.
“The message being sent now is that the state will negotiate as an equal with economic power,” Berger said.
Hollande’s government has mediated in several industrial negotiations, including carmaker PSA Peugeot Citroen (UG)’s jobs- cutting plan and the search for a buyer for a Petroplus Holdings AG refinery in France.
It has sought to have a more hands-on industrial policy as the country grapples with unemployment at a 14-year high.
“My mission is to bring back growth and to cut unemployment,” Hollande said at a Nov. 13 press conference, conceding that the labor market would not pick up before the end of next year. “These should be the only results French people judge me on.”
Laurence Parisot, the head of the French business lobby Medef, who was traveling in China, called Montebourg Nov. 26 to “caution him against such nationalization talk,” her spokesman Anton Molina said in an interview.
Montebourg tempered his comments to say he was not questioning the presence of ArcelorMittal in France. “What’s in question is Florange, just Florange,” he said.
His comments should have been more measured, Foreign Minister Laurent Fabius said on France Inter radio today.
“Whether you are in government or out, one must be careful with one’s words,” he said.
Montebourg says he wants the company to accept one of the two offers that he has for the whole of the Florange site.
While ArcelorMittal wants to shut down the furnaces at Florange, it wants to continue operating other activities at the site. It is opposing the sale of the whole of the Florange site, saying that would risk the viability of the rest of its operations in France, where the company employs 20,000 people.
“Mittal is a very important group for France,” Prime Minister Jean-Marc Ayrault said in Paris yesterday. “At the same time, the French government pays particular attention to our country’s industrial sites. It’s important that we can have frank discussions with the company, and it’s important that companies keep their promises. We need to come up with a solution, not just throw ideas around.”
On Oct. 31, Mittal reported the lowest quarterly profit in almost three years and cut its 2013 dividend to save $1 billion as slowing Asian demand sinks steel prices and the company attempts to cut debt. ArcelorMittal plans the temporary closure of its Luxembourg headquarters in 2013 to save money, Les Echos said yesterday without citing anyone.
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