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Arcelor Mittal, Europe's largest steelmaker, has reached an agreement with trade unions to open the way for an acquisition

iconSep 7, 2018 15:20
Source:SMM

SMM, Sept. 7: steel giant Arcelor Mittal reached an agreement with unions on Thursday on plans to buy Ilva, paving the way for the controversial acquisition. Arcelor Mittal last year signed a preliminary agreement to buy Ilva, which has the largest steel production capacity in Europe. But Italy's new government questioned the validity of the contract after taking office in June. However, with thousands of jobs likely to be lost as money dries up later this month, Luigi Dimayo, Italy's deputy prime minister, said on Thursday that he would no longer object to the acquisition after a union deal.

Adia Mittal (Aditya Mittal), president and chief financial officer of ArcelorMittal Group, said in a statement that "there is now a clear path to close the deal and start resuming the important work of Ilva."

Under the agreement, ArcelorMittal Group agreed to employ 10700 of Ilva's existing 13500 employees, about 500 more than originally planned. The company also pledged 250 million euros ($290 million) to settle the problem of relocating after layoffs. Employees will vote on the agreement before it is formally approved.

At its peak, the Ilva plant produced more than 10 million tons of steel a year, but local officials stepped in 2012 and said production at the plant must be cleaned up or shut down. In 2015, Ilva was placed under special regulation by the state. As a result of the cap on harmful emissions, the company's annual production has fallen to less than 5 million tons, losing about 30 million euros a month. In August 2018, Ilva told the government that it had only enough money to continue operating until September. After that, the company either needs new capital injections or just shut down.

With its expertise, ArcelorMittal says it can turn things around. In addition to the acquisition cost of 1.8 billion euros, the company said it would invest 1.2 billion euros to increase productivity and 1.1 billion euros to control pollution.

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