News Analysis: Italy, ArcelorMittal could face off over Ilva plant

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ROME, Nov. 7 (Xinhua) -- The Italian government and multinational steel giant ArcelorMittal are locking horns over the fate of Europe's largest steel production facilities.

The controversy is centered around the Ilva steel smelter in Taranto, southern Italy. The plant has a capacity to produce more than 10 million metric tons of steel per year, more than any other smelter in Europe. But it has also suffered from multiple warnings from European and Italian regulators for the illegal amount of pollution it emits and the deadly health outcomes they cause in the surrounding area.

The plant was put under state-supervised administration four years ago as the government sought to clean up the production facility and look for a private-sector buyer without closing down operations and endangering more than 8,000 jobs in one of the most economically underdeveloped parts of Italy.

ArcelorMittal, which is the world's largest steelmaker, agreed last year to take control of Ilva. The company agreed to pay 1.8 billion euros (2.0 billion U.S. dollars) for the plant while promising to spend at least 2.5 billion euros (2.8 billion U.S. dollars) to clean up the plant and increase production from 6 million to 8 million tons per year.

"The first problem with Ilva was that the plan has been to clean it up without stopping production, which is nearly impossible," Angelo Bonelli, national coordinator for the Italian Federation of Greens, an environmental movement, told Xinhua. "It would be like trying to repair a damaged car while driving it."

As part of the deal, ArcelorMittal was given legal immunity for health and environmental problems caused by the plant before the company acquired it. The government stripped that immunity earlier this month, prompting ArcelorMittal to say it would walk away from the plant. If it did that, it would put most of the jobs the plant provides at risk.

ArcelorMittal issued a press release on Sunday blaming its plans to abandon Ilva on the government's decision to withdraw its legal protection.

But Italian Prime Minister Giuseppe Conte said the question of legal immunity is not the main problem behind ArcelorMittal's threat to withdraw.

"The legal shield is not the problem," Conte said after meeting with ArcelorMittal executives in Rome. "The company believes the plant's current production level is too low to cover its investments and so it wants to reduce jobs."

Bonelli agreed. "It looks like the immunity issue is just an alibi to cover up some economic issues," he said.

According to Italian media reports, the plant now produces just four million tons of steel per year, too low to justify more than 8,000 workers, and that Conte said ArcelorMittal wanted to slash the plant's workforce by as many as 5,000.

"ArcelorMittal cannot blackmail Italy over jobs," Minister of Economic Development Stefano Patuanelli told reporters.

On Thursday, Conte said in a television interview that Italy would sue ArcelorMittal for breach of contract if the company follows through on its threat to back away from Ilva. "It will be the biggest legal battle of the century," Conte noted. Enditem

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