France reaches €180m deal on Mittal steel plant

Firm run by Britain’s wealthiest man agrees to drop plans for 650 redundancies at site

Lakshmi Mittal had until midnight to sell a steel plant at Florange in Lorraine, at which point Paris had threatened to nationalise it (AP)

The clash of steel between the French government and Britain’s wealthiest man ended with a partial victory for Paris last night.

ArcelorMittal, the world’s largest steel company, agreed to invest €180m (£146m) over five years and cancel plans for 650 redundancies at its steelworks in Florange, in the eastern region of Lorraine. In return, Paris abandoned a threat to nationalise the factory and re-sell it to a private buyer.

The showdown had become symbolic of President François Hollande’s determination to reverse the erosion of France’s industrial base. The government was forced to accept, however, that two shuttered blast furnaces would not re-open immediately.

Instead, ArcelorMittal, controlled by the Indian-born, British-based billionaire Lakshmi Mittal, will develop other profitable activites at the site, such as the production of steel plate for the German car industry. Three hours before last night’s deadline for a deal, Prime Minister Jean-Marc Ayrault said a compromise had been reached. Jobs would be preserved, he said, by a “programme of investment” in cold steel activities. The blast furnaces, which produce “raw” or hot steel, would not re-open but be mothballed until they could be converted to possible experimental use in environment-friendly steel-making. There would be no compulsory redundancies, he insisted. In return for the “unconditional promises” by ArcelorMittal, Mr Ayrault said Paris had dropped its threat to nationalise the complex and sell it within a matter of months for €400m to an undisclosed potential buyer.

The nationalisation threat caused a stir internationally. Foreign commentators, including the London Mayor Boris Johnson, mocked France for returning to the statist 1970s or even the revolutionary 1790s.

The outcome of the talks will be seen as a vindication of the tough line taken by Mr Hollande and his Industry minister Arnaud Montebourg, who had suggested the Mittal group was no longer welcome in France.

However, the deal received only a cautious welcome from politicians and unions. The Socialist mayor of Florange, Philippe Traillon, said the deal was “fine in principle” but demanded guarantees that Arcelor would keep its word. Unions accuse the firm of breaking previous commitments.