ArcelorMittal mothballs two blast furnaces in France

ArcelorMittal yesterday started to shut two blast furnaces at its Florange steel plant in the northeastern Lorraine region in France, after months of stand-off with the unions and the French government.

The Luxembourg-based steelmaker said that it will shut down the two blast furnaces, a process which will take 48 hours to complete. It will also shut the gas network system and other parts linked to the hot stoves.

ArcelorMittal, the world's biggest steel-maker, had earlier sought to shut or sell off the two blast-furnaces while retaining other profitable activities at the site, but French Socialist president Francois Hollande insisted they should be kept open and held out the threat of state takeover of the site even as the government sought a permanent buyer.

Of the 2,700 workers at the site, the two blast furnaces, which have been idle since 2011, together employed 600.

The dispute had left Hollande's government caught between a pledge to protect jobs and the need to improve industrial competitiveness in the face of rising unemployment and stagnant growth.

The steelmaker later struck a deal with the French government of shuttering the loss-making furnaces in exchange for no further job cuts and a pledge to invest €180 million ($235 million) in the plant over a period of five years. (See: France strikes deal with Mittal to save Florange operations)

Although the two blast furnaces will be shut down, the plant will continue to make finished steel products.

The investment will see the 600 workers at the two blast furnaces being offered new jobs elsewhere or early retirement, but the 800 temporary workers are unlikely to be rehired immediately.

Blaming a slump in demand and overcapacity in Europe, ArcelorMittal has been shutting blast furnaces and cutting jobs across Europe, with most of the job cuts coming mainly in France, Spain, Poland and Belgium.

In December 2012, the steel maker had to write down the value of its European business by about $4.3 billion.

The European steel industry employs around 360,000 people at about 500 plants, even as steel demand has slumped by 30 per cent since 2007, while global production declined from 22 per cent to 12 per cent between 2001 and 2011.