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ARNAUD MONTEBOURG

Hollande threatens to nationalize Mittal plant

French President François Hollande is threatening to nationalize a plant owned by steelmaker ArcelorMittal in an increasingly heated dispute in which a minister has said the multinational is no longer welcome in the country.

Hollande threatens to nationalize Mittal plant
Lakshmi Mittal (Photo: ArcelorMittal)

Moments before talks with steel tycoon Lakshmi Mittal on Tuedsay, Hollande said that nationalizing ArcelorMittal's plant in northeastern France remained on the table. 

"Nationalization is part of the subjects of the discussion," Hollande said.
  
The talks lasted an hour, a French official said, with Mittal entering and leaving Hollande's Elysée Palace discreetly.
 
A presidential statement said Hollande "asked that discussions between the state and the company continue" until a Saturday deadline to find a new investor for the site.

A company spokesman said that "talks were ongoing."

It was the second time the two men met since the crisis erupted two months ago.

Hollande's nationalisation warning came as forty lawmakers from his Socialist party said they favoured a temporary takeover by the French state of ArcelorMittal's plant in Florange.

"Mittal does not respect our country," a joint statement by the parliamentarians said, adding that his interests "were clearly not that of
France, of its industrial fabric and its workers."

Mittal, who ranks 21st on the Forbes list of the world's richest people, is locked in a battle with France over the future of the Florange site in the traditional, but declining, heartland of the French steel industry in the eastern Lorraine region.

Hollande's government has made a priority of protecting jobs as it seeks to revive France's struggling economy.

ArcelorMittal has said that two blast furnaces at Florange, which were damped down for 14 months prior to their full closure, were uncompetitive in a tough trading climate, partly because they are too far from ports for transportation.

The company gave the government two months, which expires on Saturday, to find a buyer for them. The government says it has two offers, but only for the entire Florange site including other facilities which ArcelorMittal wants to retain and keep operating.

ArcelorMittal has refused to sell the full operation and warned that nationalization of the Florange facilities would threaten the viability of all
of its activities across France, where it employs 20,000 people.

French Finance Minister Pierre Moscovici, meanwhile, tried to limit the damage to investor perceptions after Industrial Renewal Minister Arnaud Montebourg threatened to nationalise Florange and said ArcelorMittal was no
longer welcome in France.

"Everyone can understand that this case is a special one," he said.

"We of course welcome investors on our soil," Moscovici added, stressing that only a temporary nationalization had been envisaged so far.

Montebourg, who is suggesting that the state nationalise Florange so as to pass the entire site on to a buyer, raised the stakes on Monday, saying France did not want ArcelorMittal in the country any more and was looking for a partner to take over the group's operations at the plant.

"We do not want Mittal in France any longer because they do not respect France," Montebourg told the French financial daily Les Echos.

"Mittal's lies since 2006 are damning."

But Montebourg later tempered his comments, saying he meant he did not want Mittal's methods in France, accusing it of "non-respect of its commitments, blackmail and threats."

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ARNAUD MONTEBOURG

Mittal seen as winner in steel plant deal

Lakshmi Mittal has emerged as a clear winner in his battle with the heavyweights of French politics according to ringside observers of the Indian tycoon's bruising bout over the future of a threatened steel plant.

Mittal seen as winner in steel plant deal
Lakshmi Mittal (Photo: ArcelorMittal)

French President Francois Hollande on Monday warned Mittal that he would be held to the letter of an 11th-hour deal in which he agreed to preserve threatened jobs at the plant in northeastern France and to provide 180 million euros ($235 million) of investment over the next five years.

The accord was concluded on Friday night, hours before a deadline after which the government had threatened to nationalise the plant.

It emerged on Monday that Arnaud Montebourg, the industrial renewal minister who had issued the nationalisation threat, was so disappointed with the terms of the deal that he had threatened to resign before being talked out of it by Hollande.

The president on Monday played down divisions in his cabinet, instead turning the focus back onto Mittal.

"The entire government is behind this accord and wants to see it implemented and respected," Hollande said.

"All the force of the law will be brought to bear if it is not."
   
But according to industry experts, the fine print of the 'deal' struck with Mittal bore little difference to what his company ArcelorMittal had always planned.
   
"There were no significant concessions," said Guy Dolle, a former boss of Arcelor.

Jean-Louis Pierquin, another former director of the group, added: "Mittal is only implementing his initial plan.

"The 180-million-euro investment would have been made in any case — it adds up to 36 million euros a year, which is not that different to the 30 million a year they have spent on the plant for the last seven or eight years."

Dolle said the absence of a redundancy programme was also an illusory victory for the government, as staff numbers will be whittled down by natural wastage.

"It wasn't necessary given the age profile of the staff," he pointed out.

Pierquin agreed: "No redundancy programme does not mean that jobs won't be eliminated."

ArcelorMittal has said it will be negotiating with unions to allow for some workers to leave on a voluntary basis and the government has conceded that the total number of jobs at the plant may fall due to early retirement/redundancy deals.

At the heart of the row between the company and the government was the future of two idled blast furnaces on the site, which Mittal wanted to close.

The weekend agreement ensures they will be kept in a mothballed state which, theoretically, means they could be reopened quickly and the government has talked up plans for a potential conversion to a more environmentally friendly use.

Mittal however has only agreed to delay temporarily a definitive closure of the furnaces and the conversion depends on EU financing.

If that is not forthcoming, the full closure will go ahead.

The confrontational stance adopted by Montebourg in the row with Mittal —  seen in India as having xenophobic overtones — prompted criticism from business leaders that potential foreign investors in France would be deterred by the prospect of government meddling in company decision-making.

On a visit to Paris on Monday, British Business Secretary Vince Cable highlighted a significant difference between the way Mittal had been treated in France and Britain's relationship with Tata, the Indian company which owns much of the British steel industry.

"Tata take a long-term view and we are very pleased with them," Cable said.

"The problem is there is massive overcapacity in the steel industry so there is going to be contraction.
   
"We would encourage producers to do it in as humane and thoughtful a way as possible but there is not point attacking them for it."

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