ArcelorMittal Shuts Down Two French Blast Furnaces as European Steel Checks Priorities

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--A blast furnace is perhaps the most iconic image of the steel production industry, so when two blast furnaces at a single site are closed, it means times are hard. It could also mean that some rationalization is needed in the industry in terms of the relationship between basic steel production and the one step downstream of application-directed special steels and value-added steel processes.

The world's largest steel producer, ArcelorMittal (NYSE:MT) (Luxembourg), has announced that is planning to permanently close two blast furnaces at its Florange site in Lorraine, France. The company's central works council made the decision. The company stated that given the continued economic difficulties affecting the French and European economies, the company wishes to close the liquid phase and concentrate efforts and investment on the high-quality finishing operation, which employs more than 2,000 employees. The furnace closure decision will affect 629 people.

Arcelor also said that despite significant overcapacity in the European steel industry, it has accepted the French government's request to find a buyer for the liquid phase within the next 60 days.

The company said that the closure proposal had not been made lightly, but it was a reality that the Florange liquid phase and the slab it produces are not competitive in today's difficult economic context. Investment will continue in the transformation of slab into value-added, high-quality steels for the automotive industry and packaging sectors, said Robrecht Himpe, CEO for ArcelorMittal flat carbon Europe.

The company is beginning what it calls "an exemplary social dialogue with workers," and believes that it can avoid any compulsory layoffs by utilizing a number of social mechanisms.

To complete the picture, Arcelor said that the division controlling the Florange plant, flat carbon Europe, has incurred an operating loss of $1.08 billion (€839 million) between July 2011 and June 2012, and that it sees slow recovery in European demand in the coming years.

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