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French government, ArcelorMittal reach USD 234 mn deal

Posted on Dec 01, 07:16PM | IANS

The clash between the Indian-origin steel giant Lakshmi Mittal-run ArcelorMittal and the French government ended Saturday after the former agreed to drop plans for 650 redundancies at site.

ArcelorMittal, the world's largest steel company, agreed to invest 180 million euros (USD 234 million) over five years and cancel plans for 650 redundancies at its steelworks in Florange in the eastern region of Lorraine, The Independent reported Saturday.

In return, Paris abandoned a threat to nationalise the factory and re-sell it to a private buyer, it added.

The showdown had become symbolic of President François Hollande's determination to reverse the erosion of France's industrial base. The government was forced to accept, however, that two shuttered blast furnaces would not reopen immediately.

Instead, ArcelorMittal, controlled by British-based billionaire Mittal, will develop other profitable activites at the site such as the production of steel plate for the German car industry.

Three hours before Friday night's deadline for a deal, Prime Minister Jean-Marc Ayrault said a compromise had been reached.

Jobs would be preserved, he said, by a "programme of investment" in cold steel activities.

The blast furnaces, which produce "raw" or hot steel, would not reopen but be mothballed until they could be converted to possible experimental use in environment-friendly steel-making.

There would be no compulsory redundancies, Ayrault said.

In return for the "unconditional promises" by ArcelorMittal, he said, Paris dropped its threat to nationalise the complex and sell it within a matter of months for 400 million euros to an undisclosed potential buyer.

Internationally, the nationalisation threat cause a stir, with London Mayor Boris Johnson mocking France for returning to the statist 1970s or even the revolutionary 1790s.