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

Lakshmi Mittal

"We've been betrayed," said Martin Edouard, a member of the CFDT union at the Florange furnaces, told reporters.

"This is unbelievable, if that's what politics is about, what a joke," said Walter Broccoli of the FO union.

The European steel industry is struggling with overcapacity at a time of recession in the euro area and cheap competition in emerging markets.

Florange, located in France's former industrial heartland, has become symbolic of the country's long industrial decline and a test case for whether Socialist President Francois Hollande can make good on a vow to reverse a relentless surge in unemployment.

ArcelorMittal said earlier 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.

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