Companies in crisis

Former Ilva, production down. Steel Mont also in the field

The company has a production rate of 1.3 million tonnes of steel per year against the 6 million needed to reach balance

21 April 2024

L’impianto. Nell’immagine l’ex Ilva di Taranto

4' min read

Another name has been added to the list of companies that have entered the data room of the former Ilva by visiting the offices of Mimit and Mef. As reported by Il Sole 24 Ore, the Indians of Steel Mont, a Mumbai-based group that operates mainly in trading but also has a production activity, with an overall firing capacity estimated at four million tons of steel in 2024, have expressed interest and started working on the hypothesis of participating in the next tender.

Steel Mont joins the Cremonese Arvedi, the Ukrainian Metinvest and the Indians of Vulcan Green Steel, the cadet branch of the Jindal family. As of today - as reported by Sole 24 Ore - Arvedi and Metinvest would consider a double option: they could proceed independently or they could join forces in the field by preparing a joint offer by the end of the year.

The conditions in which Acciaierie d'Italia finds itself are very complicated: today it operates at a production rate that, projected over the year, would lead to a production, at most, of 1.3 million tonnes, the equivalent of just 20% of those 6 million tonnes with which the entire ex-Ilva system would reach equilibrium. The first crucial step occurred this week, with the extension of the extraordinary administration to the holding company Acciaierie d'Italia. The holding company, and not the underlying operating company, was responsible for the plant rental contracts. And these contracts are a crucial first asset to unlock the Mef's EUR 320 million bridging loan.

The three commissioners - Giancarlo Quaranta, Giovanni Fiori and Davide Tabarelli - have drawn up a plan of action that can be defined as a business plan. The industrial plan is the document to be presented hypothetically next week in Brussels, so that the Commission will judge it valid by endorsing the repayment plan of the 320 million bridge loan, which - on pain of being transformed into state aid - must be repaid half by 2028 and half by 2029.

These 320 million are needed, for a good 70 per cent, immediately. Without this money, it is not possible to carry out the thousand or so necessary interventions in the three factories. Then, at least another 600 million are needed. The banks are waiting, between Rome and Brussels, for the bridging loan to be unblocked, which, together with the 120-130 million in stock and receivables in dowry to the former Ilva, are the small financial hard core from which to try to start again. The commissioners have found very little in the till (a few tens of millions of euros). In addition, there are 150 million from the Riva treasury, the billion brought back from abroad in 2016.

The industrial plan counts on a massive use of redundancy funds. It believes it will be able to increase output to two million tonnes in the second half of this year. It considers a mix of blast furnaces and electric furnaces useful in the future. In a transitional phase, in 2025, it thinks it will be able to reach five million tonnes with two blast furnaces (Afo 1 and Afo 2) and then - between 2026 and 2027 - rise to six million tonnes: when Afo 1 and Afo 2 are shut down, blast furnace 4 will produce two million tonnes, to be joined by two electric furnaces which, together, will produce another four million tonnes.

In Genoa, the tinplate cycle was restored. In Taranto, work is underway to bring blast furnace 4, the only one in operation, back up to full capacity (4,500 tonnes of pig iron per day). It will take four to five weeks for this plant's production to recover. After that, blast furnace 2, which has been idle since January, will be reactivated. More critical will be the work on blast furnace 1, which has been idle since August, and whose crucible must be rebuilt. In the meantime, the extraordinary administration has resumed contacts with the historical suppliers of raw materials, which are essential for the smooth running of the plants.

On Monday 29 April, the government will meet with the metalworking unions, while on 7 May the commissioners will meet with the trade unions. A new lay-off procedure is to be opened, since for Novi Ligure and Cornigliano the lay-off expired in the middle of last month.

In the company, after the installation of CEO Giuseppe Cavalli, and the return, in support of the CEO, of former historical managers such as Salvatore De Felice and Ruggero Cola, other operational roles could be touched. Since 8 April, the front line has been reorganised with the addition of Claudio Picucci as Human Resources Director, Giuseppe Viola as CFO, Daniele Rossi as Purchasing Director, Nicola Pozza as Head of Raw Materials Purchasing, Giulia Costagliola D'Abele as Legal Affairs, and Andrea Paolo Colombo as Support Services. Fabio Montin and Domenico Ponzio, at Legal Affairs and Purchasing during Lucia Morselli's time, left, as did Adolfo Buffo, a retired manager recalled with a contract from Morselli for fiduciary duties.

On 19 April, the 'Ambiente Svenduto' trial against Riva's former management resumed in Taranto's Court of Appeal - and was adjourned to 17 May after the parties had filed their statements -. Former administrators are also involved, including the former governor of the Puglia Region, Nichi Vendola. The defendants are 39 individuals, including Nicola and Fabio Riva, and three companies. The aim is to close the second degree within the year. The assize trial in Taranto ended, after 330 hearings, in May 2021 with 26 convictions against owners, executives and managers of the factory and politicians for 270 years in prison. In such a complex context, eyes are also on the Milan Public Prosecutor's Office, after the Court declared Acciaierie d'Italia insolvent.