An Italian court paves the way for gas supply cutoff to Acciaierie d'Italia, owned by ArcelorMittal, due to surmounting debts, reports Reuters. With ADI facing financial woes amidst rising energy prices, this move threatens thousands of jobs, impacting Italy's southern manufacturing sector. The court ruling poses a challenge for the government, exploring options to avert closure and seeking an agreement with ArcelorMittal for ADI's sustainable future.
In a pivotal legal maneuver, an Italian court has given energy companies the green light to sever gas supplies to Acciaierie d'Italia (ADI), a steel company predominantly owned by global steel giant ArcelorMittal. The decision, fueled by ADI's escalating debts amid increased energy costs and plummeting steel prices, sets the stage for potential job losses and reverberations across Italy's manufacturing landscape.
ADI, grappling with financial constraints, owes substantial amounts to key suppliers, notably owing 104 million euros to energy giant Eni and over 200 million euros to Italian gas grid operator Snam. The latter, ADI's last-resort supplier, sought court approval to halt gas supplies, a request upheld by the administrative court (TAR) of the Lombardy region.
Despite ADI's appeal for an extension, the court ruling terminates the lifeline granted in October to the steel company, formerly known as Ilva. ADI, expressing intent to challenge the decision before the Council of State, faces an uphill battle in securing its financial stability.
ArcelorMittal, holding a majority stake of 62% in ADI, and the remaining 38% owned by state-owned investment agency Invitalia, amplifies the stakes. The Italian government, led by Prime Minister Giorgia Meloni, grapples with the potential fallout, recognizing the significance of ADI's main plant in Taranto—one of Europe's largest—and the employment of thousands in the economically vulnerable southern region.
Industry minister Adolfo Urso's call for "drastic action" underscores the urgency to revitalize ADI after ArcelorMittal rejected a government rescue plan. Negotiations between the government and ArcelorMittal aim to secure an agreement that prevents legal disputes and facilitates the company's exit from ADI.
As a short-term remedy, the government contemplates placing ADI under special administration, akin to Chapter 11 bankruptcy in the U.S. This strategic move allows the business to reorganize its debts and obligations, buying time for the government to identify a new industrial partner for ADI.
The Taranto plant, employing 8,200 individuals with an additional 3,500 in related industries, faces the specter of reduced production, partial shutdowns, and worker furloughs. The impending challenges highlight the delicate balance between economic sustainability, employment preservation, and the broader impact on Italy's manufacturing ecosystem.
The Italian court's decision to permit gas supply cutoff to Acciaierie d'Italia underscores the complex web of financial challenges gripping the steel sector. With ADI's mounting debts and the potential loss of gas supplies, the steel giant faces a critical juncture. The court ruling amplifies the urgency for the Italian government to navigate a delicate path—balancing industrial revitalization, employment preservation, and negotiations with ArcelorMittal. As ADI confronts financial turbulence, the implications extend beyond its walls, impacting thousands of jobs and the economic fabric of Italy's southern region.