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World's Biggest Steelmaker Looks to Become Even Bigger
06/30/2016 - ArcelorMittal and Italy’s Marcegaglia SpA have put down an offer on the country’s troubled Ilva steelworks in the city of Taranto, ArcelorMittal has announced.
“We believe Ilva represents a compelling investment opportunity for ArcelorMittal, without compromising our balance sheet strength, as it would extend our leadership position and increase our product offerings in Italy, Europe’s second-largest steel manufacturing and consuming market,” Geert Van Poelvoorde, chief executive of ArcelorMittal’s European flat products group, said in a statement.
The Ilva works is Europe’s largest steel mill. It’s also one of its most controversial.
Parts of it were put under government oversight in 2012 on accusations that it had befouled the environment and caused serious health problems among those who live in the region around it. The Italian government took full control of the plant in 2015 and began seeking a new owner earlier this year.
“(Ilva) is in need of a strong partner and immediate investment to stem the significant losses and guarantee a sustainable future,” said Poelvoorde.
“In ArcelorMittal, Ilva will find an experienced and committed partner ready to transfer its financial support, management know-how, operational expertise and product technology. We have carried out extensive due diligence and are satisfied that with targeted investments and a robust plan the plant can be successfully turned around.”
As part of its offer, ArcelorMittal said it intends to increase the plant’s crude steel production by 25 percent over the next four years, taking it from 4.8 million metric tons to more than 6 million metric tons annually. To that end, it plans to continue operating at least three of Ilva’s blast furnaces.
It also would invest an undisclosed amount of capital to add new steel grades to the plant’s product lineup, boost productivity and improve its health and safety performance. It additionally would install the best-available environmental technology to bring it in compliance with environmental standards, it said.
However, the ArcelorMittal-Marcegaglia offer isn’t the only one on the table.
According to the Reuters news service, there is a competing bid from a joint venture called AcciaItalia, which is made up of state lender Cassa Depositi e Prestiti, Italian steelmaker Arvedi and industrial equipment supplier Delfin, which is held by the family of Leonardo del Vecchio, founder of the Luxottica eyewear brand.
The Ilva works is Europe’s largest steel mill. It’s also one of its most controversial.
Parts of it were put under government oversight in 2012 on accusations that it had befouled the environment and caused serious health problems among those who live in the region around it. The Italian government took full control of the plant in 2015 and began seeking a new owner earlier this year.
“(Ilva) is in need of a strong partner and immediate investment to stem the significant losses and guarantee a sustainable future,” said Poelvoorde.
“In ArcelorMittal, Ilva will find an experienced and committed partner ready to transfer its financial support, management know-how, operational expertise and product technology. We have carried out extensive due diligence and are satisfied that with targeted investments and a robust plan the plant can be successfully turned around.”
As part of its offer, ArcelorMittal said it intends to increase the plant’s crude steel production by 25 percent over the next four years, taking it from 4.8 million metric tons to more than 6 million metric tons annually. To that end, it plans to continue operating at least three of Ilva’s blast furnaces.
It also would invest an undisclosed amount of capital to add new steel grades to the plant’s product lineup, boost productivity and improve its health and safety performance. It additionally would install the best-available environmental technology to bring it in compliance with environmental standards, it said.
However, the ArcelorMittal-Marcegaglia offer isn’t the only one on the table.
According to the Reuters news service, there is a competing bid from a joint venture called AcciaItalia, which is made up of state lender Cassa Depositi e Prestiti, Italian steelmaker Arvedi and industrial equipment supplier Delfin, which is held by the family of Leonardo del Vecchio, founder of the Luxottica eyewear brand.
