ArcelorMittal’s Ilva steelworks at risk after immunity removed

The future of Europe’s biggest steelworks and thousands of jobs have been plunged into doubt after the Italian plant’s operator said it would pull out because of a decision to end criminal immunity for environmental breaches.

ArcelorMittal revealed it would hand back control of the lossmaking Ilva business to the Italian authorities, following the removal of a legal protection designed to shield the company and its managers from prosecution while they undertake a clean-up of the heavily polluting facilities.

Ilva is based in the southern Italian town of Taranto and employs about 8,000 people in a region with high unemployment. Once controlled by the Riva family, the plant was accused of poisoning local residents with toxic emissions and then nationalised in 2014, before ArcelorMittal agreed to a €1.8bn takeover last year.

The rescue deal included plans to restore Ilva to a sound financial footing, along with pledges to invest hundreds of millions of euros to bring it up to required environmental standards. 

However, this month the Italian government passed legislation that revoked immunity from prosecution for managers of the Ilva plant, at the request of lawmakers from the anti-establishment Five Star Movement.

ArcelorMittal said it had a contractual right to withdraw from the lease and purchase agreement in the event of a new law that would “materially impair” its ability to operate the Taranto plant, or implement its industrial turnround plan. 

The global steel group’s decision prompted an emergency meeting between several government ministers, and anger from Italian trade unions, which criticised a recent government reform that they argued had worsened the situation.

On Monday afternoon Stefano Patuanelli, minister for economic development, met the Italian ministers for environment and the South of Italy to discuss the situation.

Marco Bentivogli, secretary-general of the Italian metalworkers union, said the removal of legal protection was among “the main reasons” for the ArcelorMittal decision.

The Italian government should “immediately repair the mess it has created,” he said in a statement, calling it “a masterpiece of incompetence and political frivolity. It does not defuse the environmental bomb, and creates a social bomb”.

Matteo Salvini, leader of the rightwing opposition League party, said the Italian government was “putting at risk the work of tens of thousands of workers and the industrial future of the country”.

Investors appeared to welcome the development, sending ArcelorMittal’s shares up 3.9 per cent on Monday. As the steel industry grapples with a downturn triggered by a decline in car sales and the fallout from the US-China trade war, the Italian unit has failed to break even.

The withdrawal notice follows months of uncertainty and equivocation about whether the Italian authorities would extend the legal protections, as well as threats by ArcelorMittal to shut down the plant if not. 

ArcelorMittal’s purchase of Ilva was seen as handing a new lease of life to an Italian industrial concern with a troubled history. As far back as 1990, Taranto was declared an area at “high risk of environmental crisis” because of emissions and dust from the works. 

The Luxembourg-based steel and mining group was forced by the European Commission to sell a number of its other plants on the continent to ease competition concerns. ArcelorMittal has asked the authorities to take responsibility for Ilva’s operations and employees within 30 days. 

This article has been amended to clarify that ArcelorMittal operates rather than owns the plant