Increasing calls for Montebourg to pipe down, making a win-win situation difficult to obtain
The French Prime Minister Jean-Marc Ayrault late on Friday announced his government had reached an agreement with Lakshmi Mittal, Chairman of steel giant ArcelorMittal under which the government would not nationalise the company’s plant in Florange. In return Mr Mittal agreed to invest 180 million Euros over the next five years to reinforce the “cold steel” part of the plant’s activity.
“There will not be any redundancy in Florange. ArcelorMittal has agreed to invest 180 million euros over the next five years in the plant and agreed to all my proposals,” Mr Ayrault told journalists in an announcement just hours before the midnight deadline on Friday.
The Prime Minister without mentioning Arnaud Montebourg said plans to nationalise the plant has been shelved as of last Wednesday, the day when Mr Montebourg was still talking of a forcible takeover of the plant by the French state. This decision is a complete disavowal of the Minister for Industrial Renewal who has come in for sharp criticism from business and political leaders in france for his boorish and insulting remarks against Mr Mittal.
It was a face-saving win-win outcome for both parties. As The Hindu had indicated earlier, the two parties agreed to opt for cleaner, greener technology for the Florange site which will receive ULCOS (Ultra Low Carbon Dioxide Steelmaking) with help from local authorities and the European Union.
This is a European research programme that aims to perfect Carbon Capture and Sequestration technology. This will help clean up the currently highly polluting “liquid” phase of steel making when iron or is smelted in gigantic blast furnaces to make liquid steel. In addition to the 180 million euros spread over 5 years that Mr Mittal’s company will provide, additional funding will come from local and regional institutions and the European Union. Mr Mittal has scored a major point. The blast furnaces will remain shut until the ULCOS project is ready to go on stream but he has promised to keep them in good order for the date, some 18 months away, when the experimental programme starts functioning.
“The government had 3 principal objectives: No redundancies, the maintance of the blast furnaces in view of clean energy and the adoption of the ULCOS plan which will guarantee respect for the environment and reduced use of energy,” Mr Ayrault said, adding that this project could become a model for industrial revival in France.
Union workers who had believed Mr Montebourg’s promises of a temporary forced nationalisation to be followed by a buy out by another private entrepreneur were furious at the news.
Lionel Burrielo of the CGT trade union described the agreement as “a betrayal” by the government. “We do not want Mr Mittal. We have no faith in his promises and we feel the government has let go. This is a huge disappointment and the unions are going to meet in the next few days to plan out next strategy. Our message is clear : We do not want Mittal. They have made fools of us tonight. The government has clearly let us down, sold us down the drain.”
Keywords: France, ArcelorMittal, Arnaud Montebourg, Francois Hollande, Business climate
Well done Mittal. The French Govt blinked.
If France, which is a free economy, can think of nationalising Mittal's plant, it is categorically established that state take over of FDI businesses is not a complete no no under market economy. Macro policy planners must study under what circumstances that can be done and stipulate those condition as a matter of standard terms and conditions of FDI in India as measure of transparency in India's business dealings. However, if it is found that such stipulation would be detrimental to FDI in India, India off course would have no choice but limit be quite on this point and be ready with conventions of market economies as the circumstances under which state intervention to the extent of nationalisation with or without compensation. If Government comes forward with policy statements in ensuing parliamentary debate, apprehensions about FDI generally and in retail and other strategic sectors would be largely eliminated.
This is one of the reasons why big indian corportes are not at all
interested in investment in western nations where accountability is a must &more so rigorous for indians.Europe is not like their
home desi babus&politicians whose palms can be greased easily.
This is not a score point for elite but it is a test for Mittal.
What the Union is saying is completely true. And I am not saying this as a supporter of the Unions or labour that they represent. Mr. Mittal did not want to run the furnaces, and did not want nationalisation of his plant. He got both of them. All for what? A promise to invest 180 million euros over five years; good luck with that. Who knows what scenario will prevail over the next five years. If the market improves, he would have every reason to keep everything up and running, and even invest those 180 millions. However, if it remains gloomy, he would always have the option to not invest and get back to square one with the French government. How much sweeter could Mr. Mittal have wanted this deal to be?
The writer of this article calls Montebourg's behaviour boorish and insulting.But we have to go
through to the end of the article to know the workers do not think of Montebourg about that way. And the French elite who think Montebourg is insulting and boorish are presumably the same kind of self serving elite which we find in India who gave Thackeray a state funeral in India.
BRAVO French Govt !
Atleast some one has guts to regulate/threaten to regulate the "big" corps.
Both US & India must learn !
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