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

Lakshmi Mittal

The French government backed away on Friday from a threat to nationalise a steelworks, saying it secured promises from the owner, ArcelorMittal, to invest and avoid any forced layoffs at the site where the company has idled two blast furnaces.

Workers at the plant said the announcement fell well short of what they had hoped from a government that won power in May on promises to combat industrial decline and mass job losses in Europe's second-largest economy.

Prime Minister Jean-Marc Ayrault said ArcelorMittal, under fire for mothballing the site 18 months ago, would invest 180 million euros and had promised there would be no forced layoffs among some 630 workers there.

Ayrault said the two furnaces in Florange, a small town of some 11,000 people near the border with Germany, would not be restarted for now, given weak European steel demand.

ArcelorMittal would keep them in working order, however, for future use in a test project for environmentally friendly steel production.

"The government decided against the idea of a temporary nationalisation that was floated in recent days," Ayrault told reporters, three hours before a midnight deadline to strike a deal. "It ruled that option out given the commitments secured from ArcelorMittal."

Ayrault said the investment would reinforce cold-steel and packaging operations at Florange and secure jobs in those areas. ArcelorMittal had pledged its investment in Florange would not come at the expense of other sites in France.

The deal, the result of months of talks, came as the Italian Cabinet was meeting to approve a rescue plan for ILVA, Europe's largest steel plant, which has 20,000 workers and is threatened with closure after accusations that emissions from the site had caused an environmental "disaster.

Labour leaders from the Florange site responded angrily and vowed to fight on to make sure that what concessions had been wrung out of ArcelorMittal were respected.

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