After 'racist' row, Lakshmi Mittal inks deal with France

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French govt backed away from a threat to nationalise a steelworks saying it has secured promises from the owner, ArcelorMittal. French govt backed away from a threat to nationalise a steelworks saying it has secured promises from the owner, ArcelorMittal.
SummaryArcelorMittal will invest and avoid any forced layoffs in the endangered Florange site.

this year the Florange site's two furnaces were not viable, but Hollande insisted they should be kept open and threatened a temporary state takeover of the site while the government sought a permanent buyer.

The two blast furnaces together employ about 630 out of the 2,700 workers at the entire site.

Ayrault offered no details on what workers would do beyond not being laid off, or a time frame for any future project to revamp the furnaces using European Union credits to produce environmentally friendly steel.

MONTEBOURG HUDDLE

Hollande's government faced roars of criticism from business leaders this week over its threat to nationalise Florange.

Industry Minister Arnaud Montebourg, who shocked foreign investors this week by saying Arcelor's Indian chief executive, Lakshmi Mittal, was no longer welcome in France, had said the government had identified an industrialist ready to inject 400 million euros into the site.

Earlier on Friday, Montebourg huddled in a cafe with a group of orange-vested metal workers protesting near the Finance Ministry, telling them nationalisation was still an option.

Yet Hollande, who is battling to appease both left-wing voters angry at unemployment and foreign investors impatient to see structural reforms, is wary of the stigma even a temporary nationalisation would carry abroad.

Officials had defended the idea of a temporary nationalisation, saying it was a special case because ArcelorMittal had broken promises to keep the furnaces running.

But ArcelorMittal denies breaching commitments. Sources close to the group say Arcelor planned in 2003 - before its 2006 takeover by Mittal - to wind down inland blast furnaces in Europe, including the two in Florange, by 2010.

The group says overcapacity in Europe's steel market, with demand 28 percent below peak 2007 levels, has made Florange's furnaces uneconomical and that a buyer would have to absorb deep losses to take them on, even with the rest of the site.

Florange Mayor Philippe Tarillon relayed the extent of dismay with ArcelorMittal's boss, telling French media: "I understand the workers would have preferred to get rid of Mr Mittal. And I will share a secret with you. Me too."

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