The truth about the former Ilva: what these 14 years have taught us

As is well known, the former Ilva tops the list of industrial crises that the government does not intend to leave unresolved during the upcoming election campaign. However, as is equally clear to anyone following developments in the steel industry, to achieve this objective the government would need to carry out a ‘truth operation’ very quickly. This should be based on two pillars. The first is to state once and for all, in no uncertain terms, that the long history of integrated hot steel production – that is, from the blast furnace – in Taranto has come to an end. The second is a meticulous dossier explaining why and how we have reached this point, 14 years on from the court-ordered seizures that marked the beginning of the decline of what was once Europe’s largest steelworks.

Only if the government shows this courage will there be a genuine chance that the commitment declared through Federacciai by 14 private Italian steel groups to revitalise the cold-rolling sector will be transformed from a serious demonstration of national responsibility into a genuine industrial project. The paradox within the paradox is that, in 14 years, the state – acting as both administrator and confiscator – has managed to shut down the blast furnaces in Taranto, just as Europe is finally realising that the measures taken over the years, such as the ETS, have thrown our doors wide open to Chinese and Indian steel. And now, thanks to the millions of tonnes of additional European production resulting from the EU’s Special Safeguard measure, it is ArcelorMittal’s blast furnaces in France, Spain and Poland that are resuming production. Meanwhile, we have effectively destroyed our own hot-rolling sector.

The task of setting the record straight regarding the phasing out of hot-rolling falls to the government, as it is the state – not the private sector – that bears responsibility for this. There is no other country in the world which, faced with the environmental transition of its steel industry, has decided to follow the path taken by the Italian state over the past 14 years: a colossal confusion of conflicting measures. Endless court-ordered seizures, successive and perpetually contested environmental impact authorisations, local institutions opposed to this or that, internally divided between keeping the plant running and closing it down. And then there are national governments of various political colours, all busy kicking the can down the road, chasing the mirage of ever more spectacular tenders to award the plants to Italian and foreign steelmakers ready to shoulder the now astronomical costs of the company’s losses, its debts, the loss of customers, and the growing volume of investment – whether the investor proposed the coexistence of blast furnace residues and electric arc furnaces, or instead opted for electric arc furnaces alone, to be fed by pre-reduction plants – though it was never actually clear how this would work, given that for 3–4 million tonnes per year a monstrous amount of electricity would be required. But Taranto doesn’t actually want the regasification terminal, and all this whilst continuing to pay exorbitant prices for both ETS allowances and electricity, and without knowing where to source the scrap iron needed for pre-reduction plants, given that even today 90 per cent of what the Italian steel industry needs for its electric arc furnaces cannot be found domestically, and that we have become increasingly dependent on foreign sources for scrap. The ruling by the Milan Court of Appeal ordering the permanent closure of the hot rolling mill in Taranto within the next eight weeks is merely the latest chapter in this dramatic saga of madness. There was a chance to avoid this tragedy: in 2014, the Bondi-Mapelli plan represented the last realistic opportunity for an orderly and gradual transition from the integrated hot-rolling cycle to electric arc furnaces, ensuring not only environmental sustainability but also the financial viability of the necessary investments. Once that opportunity was missed, no viable cash flow, given the condition of the Ilva plants in Taranto, could have funded investments, and over time would not even have been able to cover costs and debts. The 14 Italian private groups interested in the cold-rolling mill area are well aware of all this. So much so that their interest is non-binding and, as things stand, does not entail any commitment to proceed with the transaction. It is merely the essential tool for gaining access to the financial data room of Acciaierie d’Italia and the former Ilva, for accessing the facilities and assessing their current condition and maintenance status, as well as for verifying the conditions required for a comprehensive project for the cold-rolling mill area. If this is to be believed, then the state must focus all the latest financial resources authorised by the EU on supporting a new large electric furnace, on how to feed it with pre-reduced iron, and on how to sustain its supplies and energy costs. All this means, if all goes well, roughly 4,000 jobs, whilst for the 7,000 workers from the former Ilva and related industries, we must envisage training and redeployment. This is another reason why we need the ‘truth operation’: it must be clear to everyone who is truly responsible for this satanic farce that has lasted 14 years.