There is still no solution to the former ILVA – Il Post crisis

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On Monday afternoon, there was a meeting of some members of the government with representatives of ArcelorMittal, the French-Indian multinational company that is the majority shareholder of Acciaierie d’Italia, the Taranto steel plant better known as the former ILVA. The discussion concerned the economic difficulties of the former ILVA and the possibility of increasing its capital to solve the company’s serious liquidity crisis.

The former ILVA is owned 68 percent by ArcelorMittal and the remaining 32 percent by the state through Invitalia, which deals with state investments. The two partners were expected to reach an agreement to settle the situation with a large liquidity payout and a capital increase, which both partners and to a greater extent the state would have to participate in: at the end of the operation, the state would find itself with a majority stake of at least 66 percent of the company. However, an agreement was not found and the government announced that it “noted the unavailability of ArcelorMittal to undertake financial and investment obligations, even as a minority shareholder, and ordered Invitalia to legally make subsequent decisions through its team”.

For years, the former ILVA was in a state of serious financial difficulties, compounded by a liquidity crisis for several months: the company no longer had the resources to pay its debts, continue production and carry out the necessary maintenance. the result was that most of his plants gradually ceased. A lot of money is needed to restore production and maintain jobs, money that, according to the Italian state, the Indian company ArcelorMittal is not willing to invest even a small part.

According to estimates, around 1.5 billion euros would be needed to solve the financial crisis of the former ILVA. The partners met several times in December to try to reach an agreement, but to no avail. It is therefore not clear how this serious crisis situation in the company will be resolved, especially in the situation of such large differences between shareholders. The government called the trade unions for a discussion on Thursday.

For several weeks, there was also talk of nationalizing the company, which would allow the former ILVA to continue operating. It was an operation that was requested primarily by the trade unions, which also requested the replacement of the entire management, now considered insufficient for the operation of the company.

Currently, the management of Acciaierie d’Italia is in the hands of representatives of ArcelorMittal as the majority shareholder. The company bought the former ILVA in an auction in 2018 and took on the difficult task of restoring a company that was already severely compromised by years of environmental damage investigations. However, the recovery never took place and at the end of 2020 the state therefore decided to start the process to become the owner: although the Taranto steel plant owned by the former ILVA has been in crisis for years, it is the largest in Europe and for this very reason is still considered strategic. Its closure would also have a very high social and economic cost, given that it employs 10,500 people, not including the related industries, i.e. all companies charged with work not directly related to steel production, such as plant maintenance.

An agreement was therefore approved in December 2020 to relaunch the company, with the state holding 60 percent of the capital until May 2022, after which the transition was delayed for two years. In recent weeks, there has been talk of the possibility that the state not only foresees the moment of obtaining a majority, but that it even manages to obtain a higher share: there was talk of the possibility of reaching 85 percent. , but actually ended up suggesting reaching 66 during Monday’s meeting.

Speak with Radio24 journalist Domenico Palmiotti, who followed the story, explained that the operation would take place in two phases. In the first one, the state would increase from 38 to 60 percent and would do so thanks to the conversion of a large loan that the state granted to the former ILVA at the end of 2022 to help it with liquidity (the tenth in the history of the company from public money): it was 680 million and it was a convertible loan that the state can convert into equity. In practice, the money lent by the state would then become company shares. With this operation, the company would practically not gain any new liquidity.

Liquidity would then come with the second phase, i.e. with a further capital increase of 320 million euros, the largest part of which would be provided by the state as the new majority shareholder: with these amounts, he would eventually have a 66 percent stake. However, ArcelorMittal refused to provide part of this loan and did not declare its willingness to cover losses even as a minority shareholder. The government has been looking for a new partner to take over ArcelorMittal, which no longer wants to invest in Acciaierie d’Italia, but without success.

The former ILVA has a very turbulent history and its eternal crisis does not make it attractive on the market for private investors. In addition, its presence in Taranto has long been the subject of controversy due to the pollution it produces and the risks to the health of the inhabitants: it is located very close to the city and its steel production methods, with large piles of waste that remain in the air. , were particularly problematic in the past and partly still are.

For years, it has been at the center of investigations and seizures that have forced hot plants, or blast furnaces, to operate at reduced capacity or shut down, worsening its financial conditions. The energy crisis in 2022 made the situation even worse, as the increase in energy prices made the operation of power plants even more expensive.

The liquidity crisis continued throughout 2023. Since last summer, the company has significantly slowed down steel production. Of the four blast furnaces, large plants used in steel mills to make pig iron and steel from iron ore and coal, only one has been active since December. By August, however, only two were functional. In 2023, the steel produced at the plant did not reach three million tons, while in previous years the average was 7 million. If only one blast furnace were to operate throughout 2024, production is expected to drop by another 1.7 million tons of steel, according to the union.

– Read also: How to turn off the blast furnace

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