In July 2017, ArcelorMittal signed an agreement to acquire Italy’s largest steelmaker – Ilva – from an insolvency administration overseen by the country’s government. After more than a year of negotiations with the Italian authorities, the European Commission, and employee representatives, I’m pleased to say that ArcelorMittal has now finalised every aspect of the transaction – the last one being the agreement with unions - and we expect to formally take responsibility for the business on 1 November this year.
Ilva represents an amazing opportunity for ArcelorMittal, our customers, and the people who work for the company. For ArcelorMittal it means that we can bring one of Europe’s strongest steelmaking assets into the Group. Customers get a local and reliable supplier of advanced steels with an outstanding logistics and support network. And Ilva employees will benefit from long-term, secure employment with the world’s leading steelmaker.
The acquisition of Ilva is important for ArcelorMittal Europe – Flat Products for a number of reasons. Taranto is the largest single steelmaking plant in the EU and will strengthen our industrial capabilities significantly. Ilva also operates six state-of-the-art galvanising lines. Five of these were built after the newest line within ArcelorMittal.
The transaction is also critical for Italy. The country is the second-largest steel-consuming market in the EU and has a highly developed industrial sector. Until now, the unreliability of local steel supply has left these customers dependent on imported steel to meet demand. The reinvigoration of Ilva by ArcelorMittal will bring a fundamental part of the steel value chain back to Italy.
It’s no secret that Ilva has had many troubles over recent years, and addressing these issues is ArcelorMittal’s priority. We have committed to spend €2.4 billion on capex by 2023 to revive Ilva’s industrial capabilities and commercial performance, and to urgently address the environmental performance of the business. But we need to get the basic things right first.
ArcelorMittal already has the technical expertise we need to quickly transform the business. With this in mind, we will establish a new R&D centre in Taranto to focus on process and product improvements. These are also the first things we need to achieve a quick change in Ilva’s performance.
Once the turnaround is complete, Taranto has the potential to be one of the best ArcelorMittal facilities in Europe. Once the environmental plan is realised, we aim to increase the capacity of the mill to eight million tonnes of steel annually. A key measure of the plan’s success will be our ability to rebuild the connection between the business and local communities.
To help us in that process we have the most ambitious environmental plan ever for a steel mill. We have earmarked €1.15 billion to ensure Ilva’s facilities exceed best available technology (BAT) standards and set new benchmarks for our industry.
Work has already started on a cover for the raw materials area which will significantly improve air quality for the local community. In total, nearly 178,000 square metres (equivalent to 28 football pitches) of the Taranto mill yard will be roofed to reduce dust emissions. A project of this scale has never been implemented before and will become a reference for ArcelorMittal and the steel industry.
Together with the environmental plan, ArcelorMittal has developed an industrial plan to turnaround the business. However, the industrial work can only be finalised once all environmental investments are complete.
We reached an agreement with Ilva’s unions on 6 September and as part of that agreement there is a solution for each one of Ilva’s existing 13,800 employees. 10,700 will be offered jobs with us immediately. The remainder will either stay on with Ilva’s extraordinary administration to carry out environmental remediation work or will enrol in a voluntary separation scheme. Any workers under the extraordinary administration who do not have alternative employment arrangements when the scheme winds up (between 2023 and 2025) will be offered employment with us.
As in all ArcelorMittal facilities, safety will become a key focus, as will discipline and operational excellence. We will share ArcelorMittal best practices, training, and expertise with the Ilva workforce through our knowledge transfer programme. This programme has already been rolled out at other sites within ArcelorMittal and is proven to work.
Throughout the transformation of Ilva, there will be no disruptions for customers. Instead, you will be able to make solid business decisions, secure in the knowledge that you have a reliable and local steel supplier who can meet your just-in-time delivery schedule.
The turnaround of Ilva is going to take a huge effort, particularly for our new colleagues at Ilva who will shortly become part of the ArcelorMittal family. But under ArcelorMittal’s ownership and stewardship, and with our experience and deep expertise, the business turnaround and upside potential at Ilva is significant. It’s a challenge I know we can meet and a successful outcome will benefit us all.
Matthieu Jehl, CEO ArcelorMittal Italy Cluster
Copyright images: Jeroen Op de Beeck, Shutterstock - NicoElNino