Steel, former Ilva strategic: Marcegaglia ready to increase orders

Italian industrialists try to build a cordon sanitaire around the former Ilva. A cordon sanitaire of system and operation. Not of risk capital and management. In particular, as reported by Il Sole 24 Ore, the Marcegaglia family has opened talks with Flacks - the only investor left after Baku Steel, Jindal and Bedrock fled - to express their willingness to continue (and strengthen) business links with the Taranto, Novi Ligure and Cornigliano steelworks. Sources close to the dossier explain: 'There is a double plan. The first is systemic: steel produced by the former Ilva is strategic for Italian and European manufacturing. Everyone needs it. And, to preserve it, concrete gestures are needed, going beyond mere rhetoric on the subject of strategic autonomy. The second is market-related: the current economic situation is more favourable than six months ago. Prices have improved. There is an acceptable and positive form of protectionism. And the relaxation of Cbam regulation is helping. It is possible to operate with more breathing space'. Marcegaglia has a contract to buy steel produced by the former Ilva valid until 2028 for 900 thousand tonnes per year, paid at a price indexed to market trends. Last year - in Taranto's annus horribilis - it bought 700,000. In its profile as a major processor, Marcegaglia buys more than five million tonnes of coils and slabs per year, half of them in Europe: 'We are very willing to increase from 900 thousand up to even one and a half million tonnes per year. We believe that this can represent a strong stabilising element for the former Ilva,' explain sources close to the company.

This stabilisation is, indeed, functional. Already in the past, the Marcegaglias have directly facilitated and indirectly supported the former Ilva by advancing payments and facilitating the movement of goods from Taranto to Ravenna, from port to port, with a simultaneous speeding up of working capital.

The Marcegaglias, who made a bid for small tube mills during the tender, would be interested in taking them over, should Flacks' deal go through and Flacks decide to rationalise Ilva's perimeter. But, for the moment, the main interest is systemic, in the knowledge that the existence of the former Ilva is better, for Italian and European manufacturing, than its disappearance. The plea for intervention made by the government to strengthen the very fragile profile of Flacks - at his debut in the steel industry, owner of a family office whose financial and patrimonial consistency is unclear, busy giving interviews, even intent on taking over another dying sacred monster of the European steel industry such as British Steel - has therefore been accepted by the Marcegaglias, as operators who are part of the same industrial landscape. For now, despite a thousand efforts by a very active government in communication, no steelmaker has agreed to enter the capital and make a management contribution. Arvedi, who has been carried around for months by the government like a pilgrim Madonna, has called himself out. Danieli was also reportedly approached.

The Meloni government, according to reports in Il Sole 24 Ore, has reportedly gone back to asking Metinvest - the Ukrainians involved in Piombino with Danieli - and even the cadet branch of Jindal, who had already gone on the run by submitting a formally incomplete bid at the last auction, when the only one to show up in the end was Mr Flacks and when the commissioners took on the political and professional responsibility of not sending the procedure to desert.

Meanwhile, as already anticipated by Il Sole 24 Ore, several sources confirm that the Meloni government - accepting the pessimistic and hostile theses of the Mef - would not have any intention of involving public companies in the capital together with Mr Flacks: neither Invitalia, nor Cassa Depositi e Prestiti, nor Fincantieri. At the most, in the same way as the private system is trying to do with external support of a functional kind, the system of public participations could operate precisely by offering expertise, orders, money (in controlled quantities). For the time being, in a Meloni government that has, however, changed its views on this matter quite a few times, a very cautious position would therefore prevail. Welcome Mr Flacks.