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The investment agreement will result in a recapitalization of AM InvestCo, ArcelorMittal’s subsidiary, which signed the purchase agreement for Ilva’s business after ArcelorMittal completed its acquisition of Ilva on November 1, 2018.
Invitalia will invest in AM InvestCo in two tranches.
The first investment of €400 million ($484.35 million) will be made by January 31, 2021, subject to EU antitrust authorization, providing Invitalia with joint control over AM InvestCo.
The second tranche of up to €680 million is payable on closing AM InvestCo’s purchase of Ilva’s business by May 2022, at which point Invitalia’s shareholding in AM InvestCo would reach 60%, ArcelorMittal said.
ArcelorMittal will also invest up to €70 million – to the extent necessary to retain a 40% shareholding and joint control over the company, it said
The updated industrial plan agreed between AM InvestCo and Invitalia involves investment in lower-carbon steelmaking technologies, including the construction of a 2.5-million-tonne electric arc furnace (EAF). The industrial plan, which has a target of 8 million tonnes per year of production in 2025, involves a series of public support measures including ongoing government-funded employment support.
AM InvestCo’s governance would be based on the principle of joint control, starting from Invitalia’s first investment.
In 2019, ArcelorMittal said it intended to exit the deal to lease Taranto from the Italian government, which included the option of a later conditional purchase.
This came after the authorities removed the legal protections that would have allowed the company to implement its environmental plan without the risk of criminal liability. Normal operation of the plant would have resulted in excessive emissions until such time that ArcelorMittal’s improvements could be put in place, but the company was unwilling to proceed once these protections were removed.
The plant has kept its output at a low level since that time, while customers have been cautious about making deals due to the threat of strikes and further production disruptions, market sources said.
One Italian trader estimated current output from the mill, whose principal product is hot-rolled coil, at “the equivalent of 2 million tpy.”
Fastmarkets’ weekly price assessment for steel HRC, domestic, exw Southern Europe was €580-590 per tonne on December 9, up by €30 per tonne week on week from €550-560 per tonne.
The assessment was based on deals, “workable” prices and offers heard in the market.