Reuters reported that Italian steelmaker Lucchini may halt production at its Trieste iron and coke producing plant from February 1st 2012 as it is owed an unpaid bill of about EUR 45 million.
Mr Vittorio Bardi, national coordinator for steel at Italian union CGIL FIOM, told Reuters that workers at the Ferriera Servola plant in Trieste, north east Italy, have decided to call industrial action for next week against the decision to close the plant but will not put production at risk.
Mr Bardi said that Lucchini's MD Mr Marcello Calcagni had told union representatives that a firm owing money had not been paying Lucchini since July. He added that "He announced that if the problem is not resolved the company will not have the financial means to continue production from February 1st 2012."
Separately, a source at Lucchini Group, which is an affiliate of Russia's Severstal, said it is producing steel at about 65% of its capacity, down from 80% a year ago, due to weakening demand.
Italian authorities have planned a meeting between the parties involved in the difficulties at the Trieste plant for January 24th 2012 to seek a solution.
The plant produces pig iron and coke, part of which go to the Piombino plant to be processed into steel, with the remaining volume sold on the international market.
Mr Bardi said that "It is vital to keep the Servola plant working otherwise there will be problems at the Piombino plant too."
Lucchini Group is among a number of European companies that have been forced to cut capacity due to sluggish demand and a deteriorating economic outlook.
A source at the group said that "Things are not looking too good in Europe. The outlook is pretty negative, raw materials prices are still too high and clients have no liquidity."
The Lucchini Group, which included an Italian and a French business unit, produced about 2.4 million tonnes in 2010. In 2005, Severstal acquired a majority stake in the Italian steel producer, previously owned by the Lucchini family, through recapitalization.
In 2010 the Russian company sold a majority stake in Lucchini to Severstal's owner, Russia's second richest man Mr Alexei Mordashov, for EUR 1, to facilitate the sale of the debt burdened company to a third party.
Lucchini sold its French business unit, Ascometal, to US based Apollo Global Management, a move that helped to reduce the debt. Shareholders and creditor banks of the Italian steel maker reached a final agreement on the restructuring of the group's debt in December last year. Lucchini had been locked for months in debt restructuring talks with Italian banks.
(Sourced from www.reuters.com)
