The ILVA problem is not just the "penal shield"

ArcelorMittal, a French-Indian multinational steel company, told the Italian government that in order to continue its investment in the ILVA steelworks, it intends to lay off half of its current employees, which are just over 10,000. Otherwise, the company will continue the legal path it has already taken to dissolve the contract that obliges it to purchase the largest steelworks in Europe, the former ILVA, which is located in Taranto.

In a three-hour meeting, Prime Minister Giuseppe Conte tried to persuade the company to retrace his steps and offered to reinstate the "penal shield", the rule that protects company owners and managers from the risk of being involved in cases for environmental and safety problems created by the previous management of the plant. The criminal shield had been strongly weakened a few days ago by Parliament and this decision initially seemed the main reason behind ArcelorMittal's decision (we have explained the whole question here).

But the ArcelorMittal representatives have made it clear that this is not the central problem. With the current global steel crisis and the risk of having to shut down some blast furnaces by order of the judiciary, managers maintain, the investment in ILVA is no longer convenient. The conditions to continue, they explained, are three: restoration of the legal shield, authorization to dismiss about 5,000 ILVA employees and reduce the production target from six to four million tons; finally, the approval of a law that allows blast furnaces to be kept open for examination by the judiciary for another 14-16 months.

Conte has defined the conditions set by ArcelorMittal as "unacceptable", but meanwhile negotiations are continuing. Today the government will meet with the unions, which reproach the political for the continuous changes of position on the penal shield, but now they ask everyone to maintain the position and, if necessary, go to the clash with the multinational to defend the jobs. Certainly the government will continue to deal with the company and in the coming days there will probably be new meetings.

From a legal point of view, ArcelorMittal is bound to ILVA by a rental contract that, if everything goes well, will become an acquisition within a couple of years. The contract was signed at the end of 2018, after a long negotiation. With the contract, ArcelorMittal committed to a total investment of approximately 4 billion euros in the plant, including remediation and regulation of the plants and new investments, and to keep all the company's employees. At the time of purchase, the steelworks had been running a commissioner for three years after the ouster of the previous owners, the Riva family, accused of having committed numerous environmental crimes in its management of the plant.

The case started this week when ArcelorMittal's lawyers filed the formal act with which they began the procedures to exit the contract from the Milan court. The document lists the same reasons for interrupting the contract that have been presented to the government and it is explicitly written that "even if the legal protection were restored, it would not be possible to execute the contract".

In theory, he writes the Corriere della Sera, 25 days after the deposition of the deed ArcelorMittal would be entitled to leave the company, but the Milan court will hardly have decided by then if indeed the conditions have changed so much as to remove the ArcelorMittal constraint. It will take months to come to a decision and if ArcelorMittal were to disengage before it would risk having to return to the company and having to pay heavy penalties. At the moment the experts are divided on the legal aspect of the matter and it is not clear if the claims of ArcelorMittal actually constitute a sufficient justification to terminate the contract.

It will not be easy to reach an agreement. As many experts have pointed out for almost a year, in the current international economic situation, ILVA is no longer a good deal for ArcelorMittal. The company has a vested interest in getting out of the investment and could even consider a plant closure a success, which would eliminate the possibility of a competitor taking over.

The parliamentary and government majority forces are divided, creating a difficult situation for effective negotiations. In particular, a very determined group of deputies and senators of the 5 Star Movement (mostly elected in Puglia with a program in favor of the closure of the plant) has repeatedly succeeded in imposing its vision on their party and its allies (according to several newspapers, the head of the 5 Star Movement would have said referring to this group: "I don't control them anymore"). Only in the last year, thanks to the efforts of this group, the famous "criminal shield" has been removed, put back and removed again. Lega, PD, Liberi e Uguali and Italia Viva have from time to time turned to their requests, only to criticize them.

If negotiations with ArcelorMittal fail and the court recognizes the company's good reasons for disengaging, it will not be easy to find a replacement. ArcelorMittal's competitor in last year's race has already indicated that he is not interested at the moment. Without an investor, the company will come back under commissioner management and it will be necessary to find the many billions of euros that are needed to continue the environmental plan and make the city of Taranto safe. Of the alternative, to close the ILVA, for the moment, do not seem to want to talk in many.