ArcelorMittal bids for loss-making Italian steel plant Ilva

ArcelorMittal, the world's biggest steelmaker has teamed up with Italy's Marcegaglia and submitted a non-binding bid for loss-making Italian steel plant Ilva.

Ilva, Europe's biggest steel plant by output capacity, confirmed that ArcelorMittal and Marcegaglia have bid for its steel plant located in Taranto in southern Italy.

Their terms of the offer include a series of conditions, including a 30-day deadline for acceptance.

Others in the race are Italian steel company Arvedi Group, which has already tabled a non-binding offer, and India's JSW Steel has backed out due to the high environmental and pension liabilities associated with the plant.

Privately-run Ilva, which operates Europe's biggest steel plant in the southern Italian city of Taranto, is faced with the huge cost of an environmental clean-up plan ordered by the government, which it cannot support.

Ilva, controlled by the Riva family, is a maker of flat steel products used by manufacturers of automobiles, electrical appliances and ships.

However, any offer would depend on the cost of the plan ordered by the government to reduce pollution levels around the Taranto plant, which is estimated to reach around €1.8 billion.

The company already is burdened with €2 billion ($2.5 billion) debt and is losing between €60-80 million a month.

For Ilva, which has been under special administration since two years over alleged toxic emissions from the Taranto plant, which has caused abnormally high rates of cancer and respiratory illnesses in the surrounding region, sale is a pressing necessity.

"Ilva is losing money so finding a solution for the plant has become more pressing. The problem is that it is hard to plan anything until there is more clarity on the environmental restructuring," an industry source said.

Ilva was earlier valued by analysts at around $800 million but its valuation was slashed to $250-$300 million due to high cost involved in restructuring.

For ArcelorMittal, which has a reputation of buying sick companies and turning them around, a stake in Ilva would give the Luxembourg-based steel giant greater control over the price of steel in southern Europe.

Ilva's Taranto plant is currently producing about 20,000 tonnes of steel per day, or about 7.0 million metric tonnes per year, compared with an output of 6.3 million tonnes in 2013 and 8.3 million metric tonnes in 2012.

The company is also looking at the option of reducing working hours for a third of workers or 3,500 employees at the Taranto plant, in a bid to save money.