Bloomberg News

Monti Government Passes Decree to Salvage Ilva Steel Plant

November 30, 2012

Prime Minister Mario Monti’s Cabinet passed a decree law allowing Italy’s biggest steel mill to reopen, setting up a showdown with the judiciary that ordered a seizure of the plant’s output after linking it to rising cancer rates in the region.

Monti’s government is trying to protect more than 5,000 jobs in Taranto in southern Italy at a plant that accounts for 30 percent of Italy’s steel production and 5 percent of European output. Italy’s CGIL Union estimates another 7,000 jobs linked to the plant’s production are also at risk from a closure. Italy said the impact from the plant shutdown would be 8 billion euros ($10.4 billion).

The government has already targeted 3 billion euros for the plant’s clean-up, under a plan to keep production going at the site. The Environment Ministry issued an environmental license on Oct. 26, subject to the adoption of some measures. Ilva said on Nov. 28 it would shut down the facility after magistrates ordered that the plant’s steel be seized and arrested seven people, including its executives in a criminal pollution probe.

The decree seeks to guarantee production and jobs at the plant, the Cabinet said in an e-mailed statement. Ilva is authorized for production as part of the environmental license agreement, while the seizure by magistrates doesn’t prevent the company to carry out its obligations and to continue output, it said. The owner of the plant will be fined 10 percent of its revenue if the clean-up isn’t done, Environment Minister Corrado Clini said at a press conference in Rome.

“The government’s choice goes in the right direction,” European Union Industry Commissioner Antonio Tajani said in a phone interview. “We are working with institutions and Ilva to give an important European contribution.”

The Riva Group is the biggest steel producer in Italy and the fourth in Europe, with 36 production sites, with 62 percent of its total output coming from its 19 sites in Italy, according to the company’s website. Riva manufactured 11 million tons of raw steel in 2011.

The possible closure of Ilva Taranto mill in Italy, Europe’s largest, may fail to bolster steel prices as production rises across the continent and imports increase, Nomura Holdings Inc. said in a Sept. 28 report.

“Despite the risk that production at Taranto falls significantly, we would still expect EU-wide steel production to grow materially in September and October,” Nomura said in a note to investors.

The plant was hit by a tornado this week that caused “serious structural damage” at a warehouse and a chimney stack and knocked off a crane, killing one worker.

To contact the reporter on this story: Andrew Frye in Rome at afrye@bloomberg.net.

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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