ArcelorMittal Starts Mothballing French Blast Furnaces

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - The world's largest steelmaker, ArcelorMittal (NYSE:MT) (Luxembourg, Luxembourg), has begun the process of mothballing its two blast furnaces in Florange in France.

Located in the north-eastern Lorraine region of the country, the controversial decision was agreed with the French government as long as the company agreed to no forced job cuts and continued investment in the plant's other operations. ArcelorMittal blamed the mothballing on continued weak European demand for steel and higher labour and energy costs in France.

"The mothballing of Florange's liquid phase is scheduled to begin over the next few weeks and should be completed by the end of June 2013," the company stated. "Mothballing includes the stoppage of the hot stoves, as well as stopping the equipment and facilities of the liquid phase and securing their protection. The mothballing is compatible with the agreement reached with the French government."

The company agreed to invest €180 million ($235 million) over the next five years. This investment began with a €55 million investment to ensure the future of the coke plant at Florange. It is now the only plant in the world capable of producing high width Usibor Alusi, which the company claimed gives the plant an advantage in the automotive market.

This week gas feeding the hot stoves at Florange was turned off and the company will now progress to shutting down the gas network system and any related works connected to the hot stoves. ArcelorMittal explained how the situation will impact the 629-strong workforce.

"Today, 206 people of the 629 employees impacted by the mothballing of Florange's liquid phase have already left the company with the majority of them having retired," the company stated. "301 people have been moved to activities other than the liquid phase and 122 are still assigned to the liquid phase. Solutions for each of them will have to be found during the negotiations that will begin with the employees' representatives."

ArcelorMittal is attempting to cut $3 billion in costs by the end of 2015 in order to offset falling demand, particularly in Europe, combined with slower than predicted growth in China. The company also plans to shut down two other blast furnaces in Belgium. In February this year, the company said it would freeze planned job cuts and restructuring at its European steel operations until June. The company said it intended to wait until June when the European Commission (E.C.) is expected to launch its Steel Plan to help revive the region's struggling steel sector. For additional information, see February 25, 2013, article - ArcelorMittal 'Freezes' European Job Cuts.

Henri-Pierre Orsoni, CEO ArcelorMittal Atlantique and Lorraine, added: "The objective is that we can then turn our full attention to restoring the profitability of ArcelorMittal Atlantique and Lorraine, finding solutions for the employees affected and ensuring that the industrial entity has a strong and sustainable future."

The company has committed to contributing to the financing of a research programme on CO2 reduction up to €13 million. It will also align the activities of the Basse-Indre and Florange sites by developing "specialisations in terms of production at both plants". It will involve using all of the capacities of the hot and cold rolling mills and the tinning line at the Florange plant as well as all of the capacities of the two tinning lines of the Basse-Indre site.

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