Ex Ilva, here are Urso’s trips to ArcelorMittal, Conte and Calenda
What minister Adolfo Urso said about the situation of the former Ilva after the failure of the negotiations with ArcelorMittal and about the responsibilities of the Gentiloni and Conte governments. Here are the salient passages and the full text of the speech in Parliament
ArcelorMittal's behavior on Acciaierie d'Italia "is neither acceptable nor viable, both in substance and in light of European constraints on state aid". Business Minister Adolfo Urso said this during his briefing today in Parliament on the situation of the steel company previously known as Ilva after the failure of the agreement for the capital increase between the government and the Indian-Luxembourg group .
WHAT ARCELORMITTAL WANTS AND DOESN'T WANT
ArcelorMittal, continued Urso, "has declared itself willing to accept falling into the minority but not to contribute financially according to its share, offloading the entire financial burden on the State but at the same time claiming the privilege granted in the original agreements between the shareholders [ …] to share the governance in any case, so as to influence any further decision".
In essence, ArcelorMittal is in favor of becoming a minority shareholder of Acciaierie d'Italia (of which it currently owns 68 percent), which would come under public control through Invitalia (the company of the Ministry of Economy which would bring its shareholding from 32 to 66 percent). However, he is not in favor of reviewing the governance pacts, asking for the maintenance of the 50 percent condition.
Furthermore, ArcelorMittal "has no intention of injecting any resources even in the event that its share, following the share capital increase by Invitalia alone, were to fall to 34 percent".
THE FAULTS OF PREVIOUS GOVERNMENTS ON THE FORMER ILVA, ACCORDING TO URSO
According to Urso, the situation of the former Ilva is "prejudiced by the decisions taken by previous governments which we must all now remedy together". The minister refers not only to the government led by Giuseppe Conte (5 Star Movement), which eliminated the so-called criminal shield for ArcelorMittal, creating the conditions for today's crisis, according to the former Minister of Economic Development Carlo Calenda .
Urso's controversy is also partly aimed at Calenda himself.
In his speech in the Senate, in fact, the Minister of Business recalled how "in June 2017, in the meantime the Gentiloni government had arrived, Senator Calenda was minister, the Indian multinational ArcelorMittal, the first global player, won the public tender to hire the management of the steelworks awaiting the acquisition, despite the presence of another public-private consortium in which even Cassa Depositi e Prestiti participated”.
After that, "in July 2018 the Conte I government asked the Anac [the anti-corruption authority, ed. ] to investigate the regularities of the tender procedure". The following year the same government removed the criminal shield: a choice which, according to Urso, "would have justified the disengagement of the Indian multinational, which according to many had made that investment not to relaunch the plant but to prevent it from being represent market competition".
THE “LEONINE” PACTS OF THE CONTE II GOVERNMENT WITH ARCELORMITTAL
Urso's latest move is against the Conte II government, led mainly by the 5 Star Movement, the Democratic Party and Italia Viva. Faced with the threat [of ArcelorMittal, ed. ] to abandon the site and in the absence of alternatives, in March 2020 the Conte II government, minister Patuanelli, started a new negotiation with the French-Indian investors from which Acciaierie d'Italia will be born with the the entry of Invitalia at 38% and with the signing of shareholder agreements strongly unbalanced in favor of the private entity”.
“Agreements that to define as leonine is an understatement,” according to the minister. “No one who cares about the national interest would ever sign up to that kind of agreement. No one who has knowledge of industrial dynamics would have ever accepted those conditions […]. In particular, the managing director, designated by Mittal, was given the decisive vote on seven matters of extraordinary importance for the life of the steelworks; the president, designated by Invitalia, has the decisive vote on a single matter".
THE REPLICA OF CALENDA A URSO
On X, Calenda responded to Urso's words on ArcelorMittal's victory in the tender for the management of the former ILVA; tender supervised by Calenda himself, as Minister of Economic Development, and in which Cassa Depositi e Prestiti also participated.
“He won it,” Calenda wrote , referring to ArcelorMittal, “because it was a (mandatory) competition. And Jindal's proposal (of which CDP was a financial partner) was 600 million lower. And raises only on price are unacceptable. I would add that Jindal was unable to relaunch Piombino which is a tenth of ILVA. What a pain".
Calenda, however, agrees with Urso in underlining the responsibilities of the Conte government, writing that "the 5S blew up an armored and advantageous agreement (4.2 billion) to enter into a company with Mittal in the minority and with seriously penalizing shareholder agreements" .
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HERE IS THE FULL TEXT OF URSO'S INFORMATION IN PARLIAMENT ON ILVA:
The Government dutifully intends to inform Parliament about the recent developments relating to a strategic asset of national and international importance, because we are in a decisive moment, which calls everyone to the utmost sense of responsibility.
This evening the government delegation will do the same in the meeting with the trade union representatives with whom we have often discussed this year, since the beginning of the legislature, and who know well the state of the situation and the urgency of a drastic intervention, which marks a clear turning point compared to the less than exciting events of the last ten years.
The steel plants of the former ILVA of Taranto, with its factories also in Liguria, have marked the history for over 60 years, we could truly say the epic of Italian steel industry, with the work and sacrifice of entire generations, unfortunately also with the consequences are well known to the inhabitants of the Tamburri district and to whom our thoughts turn. And our commitment to ensuring that the environmental reconversion process of the plant can truly be completed.
The former Ilva, the first primary steel plant in Europe, has allowed our country to create an industrial system that has brought development and well-being and which places us in second place in the European Union. The Italy of motorways and cars, the Italy of nautical and shipbuilding, the Italy of household appliances, mechanics, railways, infrastructures and construction exists because it can count on its important, significant steel supply chain.
We believe in it and we are committed to rebuilding it competitively on the green technology on which the Italian steel mills, the first in Europe, are already engaged.
You all know that the plant is in a serious crisis situation: in 2023 production will stand at less than 3 million tonnes, as in 2022, well below the minimum target which should have been in 2023 of 4 million, for then this year it goes back to 5 million. Nothing that was planned was achieved . None of the commitments made have been kept regarding employment levels and industrial relaunch.
In recent years, production has progressively been reduced in defiance of the agreements signed, even in years in which steel production was highly profitable, as in 2019: production was kept low, leaving the field open to other foreign players who increased production their market share.
We intend to reverse the trend by changing the crew and outlining a national steel plan that is built on four complementary poles through a progressive renewal, modernization and specialization of existing plants:
1) first of all Taranto which will have to reaffirm its role as industrial champion, with a production chain with the entire cycle, from mineral to finished product;
2) Terni, where we are working in the wake of what my predecessor Giorgetti did, to strengthen the production of special steels, with a program contract that should be defined by February;
3) Piombino, with enormous potential, in particular on the rails which has underperformed up to now and which now registers the interest – in addition to the person present – of potential new foreign investors with whom we are preparing to sign a memorandum of understanding for the restart of steel production;
4) lastly, but first in terms of production importance, the support to the steel mills, especially in the north, which are successfully carrying out an unprecedented green turning point, a model of sustainable efficiency in Europe to which we must acknowledge the great efforts made.
A complex plan which will obviously also have to take into account the European context and the competitive measures implemented by other global players, the United States and China but also India, Brazil, Turkey. Of which the new Cbam regime [pronounced SIBAM – Carbon border adjustment mechanism], the carbon border adjustment mechanism, which will make it possible to increasingly distinguish between green steel and polluting steel, is a necessary but not yet sufficient element of rebalancing. In fact, Cibam aims to place economic burdens on foreign producers who work in countries with less burdensome use of CO2 but alone it is not enough to restore competitiveness to European companies which have in fact reduced their investment programs and some, like Mittal, are they have clearly said that under these conditions they will invest in the United States and certainly not in Europe. We must therefore intervene there too and we will do so to guarantee better production and therefore investment conditions in Europe also to safeguard the strategic autonomy of our continent and therefore its global competitiveness.
I had the duty to clarify the context, because we must finally define a long-lasting industrial policy, but I also had the duty to clarify why we have reached this point. And what have we done in this year of government to take back control of the situation of what is an asset of all Italians and certainly of the metalworkers and their families who have dedicated their lives to it and which we absolutely do not want to disappoint. Their work must be honored with our commitment. We are not conditionable just as they are not. Because we know what hard work is and because we remember that our Republic is founded on work.
I remember how it came to this, not to complain but to make amends. Not to accuse but to overcome, I hope together.
In January 2016, the government of my colleague Sen. was in office. Renzi, the then Commissioners of the extraordinary administration decided to launch a tender for the sale of the asset centered on some elements of environmental, industrial and – obviously – economic importance.
In June 2017, the Gentiloni Government had meanwhile arrived, minister the sen. Calenda, the Indian multinational Arcelor Mittal, the first global player, won the public tender to lease the management of the steelworks pending the acquisition, despite the presence of another public-private consortium in which even Cassa Depositi e Prestiti participated.
In July 2018 the Conte 1 government asked Anac to investigate the regularity of the tender procedure.
In July 2019 (again Conte 1 government. Minister Di Maio), the criminal shield was removed and ArcelorMittal consequently made known its intention to withdraw from the agreement. I remember on that occasion numerous voices that were raised by the opposition of the time, I personally was one of those. I stood up in this Chamber to state, on behalf of my party, that the removal of the criminal shield, in a context like that of Taranto, would have justified the disengagement of the Indian multinational, which, moreover, according to many, had made that investment not to relaunch the plant but to prevent it from representing market competition.
That decision to remove the criminal shield put ArcelorMittal in a strong position vis-à-vis the government. Faced with the threat of abandoning the site and in the absence of alternatives, in March 2020 the Conte 2 Government, Minister Patuanelli, started a new negotiation with the French-Indian investors from which Acciaierie d'Italia would be born with the entry of Invitalia at 38 % and with the signing of shareholder agreements strongly unbalanced in favor of the private entity. Pacts that to define as leonine is an understatement. No one who cares about the national interest would ever sign up to that type of agreement. No one with knowledge of industrial dynamics would ever have accepted those conditions.
The governance had in fact remained in the hands of the private partner who in the meantime, however, deconsolidated the asset, demonstrating his disengagement, also recalling his own technicians and no longer injecting any resources into the company.
In particular, the managing director, designated by Mittal, was given the decisive vote on seven matters of extraordinary importance for the life of the steelworks. The president, designated by Invitalia, has the decisive vote on a single matter. Even in the hypothesis, initially scheduled for May 2022 and then moved to May 2024, of a majority increase in the public shareholder, if certain conditions were met, Invitalia would still not have been able to designate a trusted director. I repeat: even if it had become a majority, Invitalia would still not have been able to appoint a director of its own trust, as the private shareholder himself recently declared, claiming again the day before yesterday this condition of privilege guaranteed by those wicked agreements.
Not only. Even if Invitalia had gained a majority, to 60 percent, it would not have been able to sell its shares to third parties. The only possibility granted was to sell no more than 9% to a financial partner (not operating in steel) and in any case with the right of pre-emption held by Mittal.
In this situation, compromised by a compromise, signed in a condition of minority, by those who were unable to defend the national interest while representing the Nation, we have moved from the beginning to try to recover margins for the State for action and at the same time to attempt to reverse the trend of production decline. And every intervention this year has been in this direction.
With the Ilva decree of December 2022:
– we have introduced non-punishability in the case of assets declared to be of national strategic interest – for actions that derive from compliance with the provisions dictated by provisions aimed at protecting the protected legal assets;
– we supported the capital strengthening of Acciaierie d'Italia with 680 million euros convertible into shares at any time, even earlier than previously determined for May 2024;
– we have made an additional 1 billion euros available to Invitalia to support any additional financial needs of the company that may be necessary to achieve the production objectives for 2023 (4 million tonnes of steel) as agreed between the shareholders in the Term sheet which in meanwhile it has been defined;
– we have also foreseen the possibility that the public shareholder can, if the conditions of insolvency exist, activate extraordinary administration procedures if the legal representative does not activate them. A sort of bolt to protect the public good in any case.
– With the finalization of the Term sheet (January 2023), agreed on that occasion, we have partially redefined the previous agreements, creating better governance conditions and providing for the possible entry of another industrial player also in partnership, something previously expressly excluded.
We also ensured that the free ETS certificate shares due to the company were made available by the end of February with significant financial benefits (estimated in the order of 250 million euros).
We have unblocked the investigation of the Development Contracts, creating the conditions for further decarbonisation investments, in addition to those relating to industrial investments (revamping of Blast Furnace 5; interventions on Blast Furnace 4, other interventions) and the construction of the electric furnace.
We have recently introduced with the strategic assets decree the possibility of selling the plants even if the seizure is in force, allowing operational continuity even in the event that the final level of judgment were to confirm the confiscation of the plants.
The possibility of acquiring the plants and the consequent capitalization can lead to ready bankability and therefore to the liquidity for the company which is essential to ensure maintenance and investments, as well as to restart production.
As can be seen, the effort that the institutions (Government and Parliament) have made in recent months has been aimed at creating the conditions for greater commitment from shareholders, also outlining on several occasions what the priorities are for ILVA from the point of view of production and of employment.
We have repeatedly clarified to the private partner how a joint commitment is necessary on immediate needs, on the recapitalization and purchase of assets and on productive and environmental investments: extraordinary interventions are needed for the revamping of some blast furnaces, the reconstruction of the systems used to transform in energy the blast furnace gases (cet 2 and cet 3), the installation of an electric furnace with the use of pre-reduced iron (Direct Reduced Iron – DRI) with lower environmental impact, the adaptation and extraordinary maintenance of the transformation plants ( rolling mills, pipe mills and processing centres) located in Taranto, Genoa, Novi Ligure, Racconigi and other smaller centres, the completion of the safety measures and reclamation (where necessary) of the areas, also based on possible alternative uses for the benefit of the community local.
As is known, the Government has met with the unions on several occasions to take stock of the main critical issues affecting the production plants and a road map for the ongoing discussion with the company has been defined.
The private partner, faced with the request for a pro quota financial commitment, said very clearly in last Monday's meeting at Palazzo Chigi that he has no intention of injecting any resources even in the event that his share, following the increase of share capital by Invitalia alone, were to fall to 34%.
Arcelor Mittal has declared itself willing to accept going into the minority but NOT to contribute financially according to its share, offloading the entire financial burden on the State but at the same time claiming the privilege granted in the original agreements between the shareholders made when they gave life to the company Acciaierie d'Italia to share governance in any case, so as to influence any further decisions. Which is neither acceptable nor feasible both in substance and in light of European constraints on state aid.
We have therefore mandated Invitalia and its legal team to explore every possible consequent solution. These are decisive times to guarantee, in the immediate future – in the absence of commitment from the private partner – the continuity of production, and the safeguarding of employment, in the period necessary to find other industrial investors.
This is the situation we have before us, prejudiced by the decisions taken by previous governments which we must all now remedy together with the maximum assumption of responsibility.
We are aware of the importance of the decisions we have to take and therefore we consider the indications that the political forces wish to express here also important. I hope I have been clear and I expect the same clarity from you in absolute respect for what is the sovereign place of popular representation.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/adolfo-urso-informativa-parlamento-ex-ilva/ on Thu, 11 Jan 2024 14:42:14 +0000.