PARIS (Reuters) – The French government announced an agreement with ArcelorMittal on Friday evening regarding the future of Florange, thus avoiding having to carry out its threat to nationalize the Moselle steelworks.
The Prime Minister announced that the steel giant had agreed to invest 180 million euros over five years in the steel processing part of Florange, but the blast furnaces at the site will not be restarted.
“There will be no social plan in Florange,” he stressed, even though job reductions will be implemented through early retirements.
Jean-Marc Ayrault explained that the government had not considered the possibility of a “transitional nationalization” of the site, “in view of the commitments it obtained from ArcelorMittal”.
Initially brandished by the Minister for Industrial Renewal, Arnaud Montebourg, this threat of nationalization was subsequently confirmed by the government.
The Prime Minister acknowledged, however, that this solution was not effective “in the face of a problem of outlets for a company or in the face of a problem of competitiveness”, as is the case for the blast furnaces of Florange.
“NO CREDIBLE BUYER”
Above all, a source at Matignon indicated that the industrialist ready to invest 400 million euros to take over the Florange site, which Arnaud Montebourg had mentioned on Wednesday before the National Assembly, was not credible.
“There was no credible and firm buyer,” said this source close to the negotiations, directly questioning the seriousness of Arnaud Montebourg’s threat of temporary nationalization.
The Elysée Palace has indicated that the State will remain vigilant regarding the implementation of the agreement, concluded after a standoff lasting several days with the group led by Lakshmi Mittal.
“The means of exerting pressure do not disappear with today’s announcement. If he (Mittal) behaves like a man who does not respect his word, there are means of exerting pressure,” said a source close to the head of state.
THE REVOLVER ON THE TABLE
“We’re keeping the revolver on the table,” summarized one advisor.
By officially announcing on October 1st the shutdown of the Florange blast furnaces, resulting in 639 job losses, ArcelorMittal had given the government two months to find an investor for the “hot phase” of the site.
Lacking a buyer for this single activity deemed unprofitable in the current context of a sharp decline in the steel market, the government wanted to obtain from Mittal the transfer of the entire site, including the strategic “cold phase” in order to attract a potential buyer.
The agreement presented on Friday does not provide for the restart of the blast furnaces in Florange, the last in the Lorraine region, but only their maintenance in a state which allows the Ulcos project to be launched in the future, a technology which allows for more ecological steel production thanks to the capture of CO2 released.
This project must nevertheless receive the approval of the European Commission and therefore there is no guarantee at this stage that Florange will host this industrial project.
Jean-Marc Ayrault specified that the State, which had already reserved 150 million euros for the project, was ready to invest more.
Friday’s announcement comes at the end of a tumultuous week surrounding a symbolic rescue of the government’s commitment to saving French industry.
Matignon took charge of the negotiations but “the broad outlines were set at the Elysée”, it was specified in the entourage of the President of the Republic.
Even though it anticipates some disappointment from the unions, the French executive wants to believe that the government’s initial commitment has been kept.
WAITING FOR ULCOS
“This will never be enough, but in relation to the campaign promise that there will be no layoffs, we are maintaining employment in Florange, the steelmaking activity in the cold sector, we are giving ourselves the means to develop the hot sector and we are proving it because in addition we are charging 180 million, these are four strong arguments,” added a source at the Elysée Palace.
In Lorraine, however, the initial reactions were mixed.
“We are being given the Ulcos project, which will allow Lorraine steel production to continue and ensure the site’s viability for fifteen or twenty years,” reacted Walter Broccoli, representative of the Force Ouvrière union in Florange, a minority union at ArcelorMittal.
Jean-Marc Vécrin, CFDT delegate and head of the ArcelorMittal Atlantique and Lorraine union, said he was “very ambivalent”.
“The positive point is that there is no redundancy plan and the blast furnaces remain standing. On the other hand, we are very skeptical about the commitments that Mr. Mittal is expected to make. We know his promises,” he told Reuters.
“From now on, a new battle begins; we will have to verify every day that these commitments are being honored.”
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