French government considers nationalization of steel mill

A union representing French steelworkers issued a statement on Monday calling for the nationalization of a steel plant in the Lorraine region after its owner announced that a temporary shut down of two of the plant’s blast furnaces would become permanent and eliminate 600 jobs.

After meeting with the owner of the steel plant on Tuesday, Frances’ President Francois Hollande said that nationalization of the plant remains a distinct possibility.

Lakshmi Mittal, owner of ArcelorMittal, an international steel and mining company, in October announced that two blast furnaces at its steel mill in Florange, located in the Lorraine region of  northeastern France, would be closed permanently. The blast furnaces had been shut down temporarily 14 months ago.

Since then Force Ouvriere Metaux (FO Metaux), a union representing ArcelorMittal workers, has led a campaign to keep the blast furnaces open. In October when the company announced that it was closing the blast furnaces for good, union members rallied at the plant and temporarily blockaded it.

As a result of pressure from the union, the company agreed to give the government two months to find a buyer for the blast furnaces. That deadline expires on December 1.

The blast furnaces are part of ArcelorMittal’s larger, profitable operations in Florange. The furnaces, or the hot mills as they are called,  provide the iron and coke that are turned into steel at the Florange cold mill. The steel produced by the cold mill is used to manufacture cars and other industrial consumer products.

ArcelorMittal wants to continue manufacturing steel at Florange without the hot mills.

Without the larger steel plant, there has been little interest in buying the hot mills alone.

Back in October, FO Metaux proposed that the government consider nationalizing the whole Florange plant. On Monday, it demanded action as the December 1 deadline for finding a buyer drew closer.

“With or without Mittal, the government must ensure the preservation of  blast furnaces, packaging and maintenance jobs scheduled to be eliminated,” read a statement from the union. “We urge the President and the government to temporarily nationalize the entire Florange factory, both the hot mill and cold mill. It’s the only economically viable solution.”

The Florange plant itself has been a profitable operation and Lorraine, a region with an unemployment rate of more than 10 percent can ill afford to lose more jobs. Workers at the plant blamed the company’s greed for the furnace closures.

“It’s not that we don’t make money here,” said Cyril Coplin, a ArcelorMittal worker to the Guardian as he helped blockade the factory in October. “It’s that we don’t make more money for Mr. Mittal. It’s about maximum profit, not people.”

Mittal bought Arcelor SA in 2006 in a hostile takeover. The deal included the mill at Florange. To win government approval for the takeover, Mittal promised to not cut jobs and to maintain investments at a level that would keep the country’s steel production competitive.

The decision by Mittal to shut down the furnace and eliminate jobs caused Arnaud Montebourg, France’s Industrial Recovery Minister to accuse Mittal of going back on his word. Montebourg said that the French government would not tolerate Mittal’s methods.

Mittal, a billionaire whose expertise is in finance, has loaded ArcelorMittal with more than $23 billion in debt.

The high debt load caused rating agency’s to downgrade the company’s bond rating.

The company’s announcement that it was closing the Florange blast furnaces was seen as an attempt to reassure bond holders that the company would do whatever is necessary to meet its debt obligation.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s