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ILVA closure to cost Italy firms up to EUR 5 billion a year
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Friday, 30 Nov 2012

Reuters reported that closure of Italy's troubled ILVA steel plant would cost manufacturers up to EUR 5 billion (USD 6.47 billion) of additional costs every year and send some companies to the wall.

Head of Italy's steel makers association told Reuters that ILVA was forced to stop production at its giant plant in the southern city of Taranto due to health hazards and now faces a threat of permanent closure after Italian magistrates this week seized material in a corruption investigation.

The plant produced 8.5 million tonnes of steel in 2011, of which 5 million tonnes went on to the domestic market.

Federacciai President Antonio Gozzi told Reuters in an interview that but importing steel from foreign producers could bump up prices by 50 to EUR 100 a tonne.

Mr Gozzi said that "The additional cost for the industry would be 2.5 to 5 billion euros and it would lead to a series of business closures.” He said the closure of ILVA would also hit Italy's trade balance by some 25 billion euros, if Italian companies were to purchase steel at 500 euros per tonne.

He added that "The roughly 5 million tonnes of production used in Italy would have to be replaced by imports while we'd lose the 3 million tonnes that are exported.”

The ILVA plant accounts for nearly 30% of the country's total output and the issue is seen as a litmus test for Mario Monti's efforts to safeguard Italy's heavy industry and preserve jobs in Italy's poor and underdeveloped south.

Despite an excess capacity of steel in Europe, Italy's large manufacturing base, which includes carmaker Fiat, needs large quantities of the metal at competitive prices to be able to survive as it already struggles with high energy costs.

Importing steel from France and Germany would leave Italian users with longer lead times, a need to build up stock and higher transport costs.

Mr Gozzi said that "The government must be aware of the importance of steel for Italian industry. The manufacturing sector lives because it can get steel in Italy. If it has to import it will lose its competitive edge.”

Source - Reuters


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