Unions scream betrayal over ArcelorMittal deal

French Prime Minister Jean-Marc Ayrault has announced a deal with steel giant ArcelorMittal which he said saved part of a massive plant threatened with closure.

Unions scream betrayal over ArcelorMittal deal
Industrial Renewal Minister Arnaud Montebourg with ArcelorMittal workers on Friday (Photo: Fred Dufour/AFP)

But unions at the plant denounced what they described as a betrayal by the government, saying they had backed down on a threat to nationalize, and wanted to know what had happened to a possible buyer mentioned by one minister.

Ayrault said ArcelorMittal had committed to invest at least 180 million euros ($234 million) over the next five years in the endangered Florange site in northeastern France.

The company had also reaffirmed its commitment to the region and the money invested in Florange would not be at the expense of its other sites it ran in France, he added.

The government has not retained its proposed "temporary nationalization" given the commitments ArcelorMittal had made, he added.

The company had closed the two blast furnaces as the demand for steel slumped.

Friday's agreement came after three days of tense negotiations and within hours of a deadline set by the world's top world steelmaker for a deal.

ArcelorMittal had insisted the government find a buyer for the two blast furnaces at the Florange site, in the northeastern Lorraine region, by Saturday.

At stake were the 650 jobs there.

Ayrault, reading from a statement, said the two blast furnaces ArcelorMittal had closed would be left intact for now, until EU financing was
confirmed for an existing carbon-capture project.

Both ArcelorMittal and France are stakeholders in this project.

"The government has thus shown the capacity for state intervention to bring about positive solutions for jobs, investments and future industrial projects" in a troubled sector, he added.

"These undertakings of ArcelorMittal are unconditional," he added.

"The government will see that they are scrupulously respected."

But a spokesman for the CFDT union at the plant quickly denounced the deal.

"We have the feeling we have once again been betrayed," said Edouard Martin at the Florange plant, a few minutes after the prime minister's statement.

   "We don't trust Mittal at all," he added, referring to tycoon Lakshmi
Mittal, the steel giant's owner.

Martin called for direct talks with both the government and company management.

A source inside the office of French President Francois Hollande said they still had the means to apply pressure on the tycoon, should that be necessary.

"If (Mittal) acts like someone who doesn't respect his word there are ways to apply pressure," the Elysee official said Friday.

"We are keeping the revolver on the table," he added.

But CFDT secretary general Dominique Gillier wanted to know why the prime minister had made no mention of a possible buyer that his Industrial Renewal Minister Arnaud Montebourg had mentioned.

Hours earlier Montebourg, meeting with workers from the plant camped outside his office, had told them the nationalisation option was "not a false hope but a solution that is serious, credible and lasting."

ArcelorMittal however had made it clear that any nationalisation of the plant would cast doubt on the future of all its operations in France, where it employs 20,000 people.

Montebourg had already said there were interested investors, but only for the entire site, with a nationalisation as a means to sell the plant to another firm.

The world's largest steelmaker, which had always wanted to keep operating the rest of the Florange site, had given the government until Saturday to find a new investor willing to take over the furnaces.

On Wednesday, Montebourg had said one industrialist had been interested in pouring 400 million euros into the plant.

In the end though, there was no buy-out and no nationalization.

A source at the prime minister's office said Friday there were no "credible, firm" takers for the site.

Montebourg is widely regarded as a loose cannon inside the government.

As the dispute over the threatened plant came to a head on Monday, he accused the steel group of blackmailing France.

They were "no longer welcome in France", he added, sparking outrage in business circles.

Hollande's government has been caught in a bind over the plant, between his pledge to protect jobs and improve the competitiveness of French industry.

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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."