Steel Mills

ArcelorMittal and JSW to Bid for Ilva Steel

October 3, 2014

Italian mill, Ilva Steel Italy expects bids from Indian steel producer JSW and a joint venture of ArcelorMittal and Italian steel processor Marcegaglia sometime within the next few days.

ILVA owner Riva Steel shut down all of its plants except the Taranto-based Ilva in September 2013 after more than 1 billion euros ($1.25 billion) of Riva Group assets were seized in connection with criminal activity associated with environmental disasters at the mill.

In 2012, emissions from the plant were found to contribute to high mortality rates from cancer and respiratory diseases in the Taranto area.

The plant has been under special administration by the Italian government since last year. The company has debt of approximately $2.5 billion and needs investment of at least $2.25 billion to meet compliance with environmental regulations.

ArcelorMittal could spend as much as $500 million for a 70 percent stake according to JP Morgan analyst Alessandro Abate. JSW’s bid could be in the range of $400-$500 million according to reports by India news sources.

“The ArcelorMittal-Marcegaglia team is the only serious alternative to the current ownership structure … as it would offer more credible guarantees … for employment and (the) company’s turnaround,” said Abate as reported by Reuters.

In 2013, production at Ilva was 5.7 million tonnes, slightly more than half of its 11 million tonnes capacity.