Ilva caught between the desire to survive and a future of hairy mussels

Are the Indians returning to Taranto, even if they’re called Jindal rather than Mittal? Or will Cavalier Arvedi, the man who revolutionised the steel industry, as Paolo Bricco wrote in Il Sole 24 Ore, have the final say? It is now down to these two to vie for the spoils of Europe’s largest steelworks. However, it is likely that the Italian champion will prevail, perhaps with the government acting as a crutch and guarantor, through the Cassa Depositi e Prestiti or via Invitalia, the Treasury’s investment agency. In any case, the last blast furnace, shut down by court order, marks the end of the steel production that underpinned the post-war economic miracle, and which gave rise to cars, fridges, washing machines and all the instruments – including the symbolic ones – of what was called the consumer society. An era has come to an end; it took almost twenty years to fade away completely. We shall now see what new phase will begin and who will usher it in. There is also a third possibility, perhaps less likely today, but still very much alive: the possibility that the hairy mussels have won the day. Is that a joke? Not at all. On 17 October, thousands of Tarantines took to the streets, demanding no longer that Ilva be saved, but that it be shut down completely, dismantled as happened at Bagnoli – Italy’s first major steelworks, established in 1905, decommissioned in 1992 and sold off in pieces to Chinese and Indian buyers. How would the workers and residents of this ancient Greek city, overlooking no fewer than two gulfs, make a living?

In this industrial, social and political drama, which resembles a vaudeville show, it is the Taranto mussel that takes centre stage. Then-Five Star Movement Senator Barbara Lezzi, during a televised exchange broadcast in 2018 on La7 with Carlo Calenda—then Minister for Economic Development in the Gentiloni government—stated that the future of ‘Taras between the two seas’ lay in tourism, services, and hairy mussels. They really do exist and are a specialty of Puglia, if not specifically of Taranto. The remark provoked a strong reaction; Lezzi has continued to complain to this day because those mussels have stuck to her like limpets clinging to the rocks – a symbol of improvisation, if not incompetence, but above all of an indomitable anti-industrial bias.

In 1964, a cheering crowd welcomed Aldo Moro, Prime Minister and de facto governor of Puglia, and Emilio Colombo, Minister of the Treasury, to the grand opening of Italsider – the merged blast furnaces and steelworks. Celebrations took place in 1980 when the factory’s capacity was doubled. Meanwhile, two neighbourhoods – Paolo VI and Salinella – had been built to house the workforce that had arrived, numbering 43,000 people in total, including both direct and indirect employees. Pier Paolo Pasolini had been moved by that ‘shattered rough diamond’, and the ‘factory city’ was hailed as a triumph. The Taranto steelworks, the largest and most productive in Europe, was a source of national pride. Then, year after year, the triumphs of that era turned into so many indictments, and a major industrial, environmental and social issue became a legal case buried under a mountain of debt and legal documents.

The Italian steel industry plays a central role in the European steel market and, in fact, holds a significant leading position in terms of environmental sustainability, thanks to a production process – now predominant in Italian plants – based on the use of electric arc furnaces fuelled by scrap metal, which generate low CO₂ emissions, promote recycling and the circular economy, and do not emit substances harmful to health. Then there is Ilva, with its main plant in Taranto, which operates a fully integrated production cycle – that is, based on the smelting of iron ore and coal (coke) in a blast furnace, followed by the rolling of flat steel products (coils, slabs, sheet metal) – covering an area of over fifteen square kilometres, extending right up to the city’s outskirts. Its proximity to residential areas – with some neighbourhoods built right next to the plant – is a crucial factor, making this company unique in Europe. “Taranto is sea and steel, a city that has become an extension of a factory, which during the economic boom years was a symbol of prosperity, hope and the public sector’s commitment to the revitalisation of Southern Italy. Over the years, the city has coexisted with Ilva, but has also suffered from its looming and polluting presence; consequently, Taranto has been classified by the state as a high-risk area and defined internationally as a ‘sacrifice zone’,” writes Assonime, the association of listed companies, in its report entitled “Fragilità d’acciaio”, 150 pages packed with facts and reliable data, but also with distressing questions.

The Chamber of Deputies’ Research Service summarised the latest developments and the taxpayers’ money involved (or should we say ‘wasted’?) as follows: “The former Ilva, placed under special administration in 2015 due to insolvency, has been the subject of numerous legislative and financial measures to ensure the continuity of production and environmental remediation. In 2017, ArcelorMittal, through the company AM InvestCo Italy, acquired the business units under a lease-purchase agreement, undertaking to implement the environmental plan by 2023. Subsequently, the Italian state intervened with funding and equity investments, including Invitalia (a Treasury-owned company, ed.) taking a 38 per cent stake in AM InvestCo (later renamed Acciaierie d’Italia Holding). In 2024, the company was placed under special administration at Invitalia’s request, and the procedure was extended to its subsidiaries as well. Its liabilities amounted to 1.58 billion euros, with further claims yet to be verified.”

Between direct payments from the Treasury and guaranteed bailout loans, €2.779 billion has been spent since 2012, rising to over €3.6 billion when redundancy payments are also taken into account. Responsibility lies with almost all the key players: private industrialists, the magistrates of Taranto, those of Milan and those of Luxembourg, the trade unions, environmentalist demagogues, the people of Taranto, mayors and regional presidents, and the governments – no fewer than eight since the crisis broke out in 2012 (Monti, Letta, Renzi, Gentiloni, Conte I and II, Draghi, Meloni). All have spent public money and frantically scrambled to deal with one emergency after another. As for Minister Adolfo Urso, he has shouldered the burden of the steel industry as if he were Atlas. But he is not.

“There has been a lack of a comprehensive framework to safeguard the correct balance between the various protection requirements,” writes Assonime. “The judiciary is not fulfilling this role; for years it has maintained asset freezes despite substantial investment in the company and the gradual, albeit slow, compliance with the requirements imposed by environmental legislation and the safety measures for the factory. Nor do governments do so; with few and fleeting exceptions, they remain more inclined to quell public alarm than to see through a long-term industrial strategy. What has instead been played out in full view is one of the most serious conflicts between institutions and powers in Italian history, which continues to this day.”

Assonime’s work is not a cold, technical study; it is a book, a novel, a tragic tale of missed opportunities, a story rich in characters and plot twists. Milena Gabanelli argues that the mountain did not begin to crumble in 2012 with the court-ordered seizure, but long before that, due to the web of interests spun by those who never wanted it and sabotaged it. This is certainly part of the tragic decline, but that decision taken 24 years ago represents the culmination of widespread rejection. And amongst these interests are local ones too, and there is a conflict that has undermined Italy over the last few decades.

The original Ilva was founded in 1904 in Naples – or rather, in Bagnoli – and was rescued for the first time in 1911; then, following the great crisis of the 1930s, it became part of IRI. In 1937, Finsider was created, which also took over Cornigliano (Genoa), Terni and Dalmine. Its post-war revival was due to the plan drawn up by Oscar Sinigaglia and approved in 1948. It envisaged a significant increase in production capacity thanks to the reconstruction of Cornigliano and the vertical integration of manufacturing processes at Piombino and Bagnoli. Ilva had always focused on producing crude steel, leaving subsequent processing to private companies; from that point on, however, it was also required to produce sections, rails and coated steels, as well as flat-rolled products for the automotive industry. The era of state-owned steel began and lasted until the late 1980s, when Finsider’s massive debts alarmed the European Commission. The Davignon Plan, which had reorganised the European steel industry through a major programme of cutbacks and restructuring, had not been enough. Finsider was wound up as early as 1988, and everything – plants and debts alike – passed to Nuova Ilva; subsequently, what had been merged over 60 years earlier was split up again. This marked the start of the privatisation drive, followed in 1993 by the agreement between the Minister for the Treasury, Beniamino Andreatta, and the European Commissioner, Karel van Miert.

The Genoa-based steelworks had been acquired in 1989 by the Riva family, one of the leading private steel companies, the same group which, six years later, would also take over Ilva in Taranto, paying 1,649 billion lire (approximately 851 million euros) and assuming debts of 1,500 billion. Terni Acciai Speciali had ended up in the hands of ThyssenKrupp. Today it belongs to the Arvedi Group. Piombino, bought by Luigi Lucchini from Brescia – once dubbed ‘the king of rebar’ – passed to the Russian firm Sevestal, owned by the tycoon Mordashov; then came the Algerians of Cevital, the Indians of Jindal, and the Ukrainian firm Metinvest, which is now forced to withdraw, leaving only its partner Danieli for the three-billion-euro green steelworks project. Things went better for Dalmine under Techint, controlled by the Rocca brothers, descendants of Agostino Rocca, to whom Mussolini had entrusted the steel industry. Having emigrated to Argentina in 1946, he became a steel magnate in South America. The hope of ‘giving Italy new capitalists’, as Romano Prodi wrote in 1992, has left a bitter taste.

When the environmental issue came to the fore, Ilva was being profitably run by the Riva Group, which was, however, expropriated without compensation. Emilio, the true ‘master of the ironworks’, was accused of failing to invest in remediation and charged with causing an environmental disaster. He received a first-instance conviction in 2021, but the trial is to be retried due to a lack of impartiality on the part of the judges. Since the first preventive seizure of the Taranto plant, ordered by the judge for preliminary investigations in that fateful year of 2012, the factory has never recovered; and in the years that followed, with a succession of receivership and no fewer than two extraordinary administrations over the same industrial complex, it has accumulated losses requiring massive injections of public funds and has inexorably lost a large part of its production capacity. “There are many interests at stake, all closely interlinked: the continuity of the business and production, the environment, health and employment; yet the measures taken over time have been driven by ad hoc, emergency-based logic, amidst intense – and at times openly conflictual – clashes, even amongst the various branches and powers of the State,” Assonime emphasises once again.

Let’s add the environmentalists of Puglia, led by a combative Niki Vendola who, once president of the region, tried in vain to square the green circle. He is echoed by Michele Emiliano, the magistrate who will govern the region from 2015 to 2026. The Taranto administrators end up like Renzo’s capons. It is a triumph for the legal hucksters of every stripe. But even the commissioners appointed by successive governments are left high and dry. The impact this would have had on employment led to the pursuit of far more convoluted paths, all of which were dead ends. The temporary lease to ArcelorMittal has turned into a huge mess that has brought the state back into the capital, via the Treasury’s budget. ‘Renationalise’ is still the trade unions’ watchword today. In reality, from 2012 onwards – thanks in part to the money spent – Ilva has already been ‘nationalised’ in practice.

At that point, the story becomes a legal report, accompanied by the ‘Salva Ilva’ decrees and rulings from both the Constitutional Court and the European Court of Justice. Ilva is classified as a ‘facility of national interest’ and an environmental commissioner is appointed; Enrico Bondi and Edo Ronchi are named, and they propose a gradual transition to an electric furnace fuelled by pre-reduced steel as a way forward. The difficulty in securing the necessary funding and the lack of public investment led to the project’s failure, and Bondi was replaced as special commissioner by Piero Gnudi, to whom the Renzi government entrusted the task of finding a buyer for Ilva, which was now on the brink of insolvency. In 2025, however, the essential elements of the Bondi-Ronchi plan were revived and formed the basis of the Programme Agreement promoted by Minister Urso. “It is bitter to realise that the path outlined by Bondi was the right one and that eleven years have been wasted, during which a process of environmental upgrading and decarbonisation of the plant could have been implemented, which might have placed Ilva amongst the world’s and Europe’s leading producers of green steel,” laments Assonime.

On 21 January 2015, the first extraordinary administration was initiated; this process, lasting approximately three years, led to the sale of the company to a major industrial partner. ArcelorMittal, a global steel giant with production sites in various European countries, starting with France, prevailed over the alternative Italian-led consortium involving Cassa Depositi e Prestiti. Threats by the new Conte government to challenge the tender process and, ultimately, the repeal of the legal immunity for the extraordinary commissioners and plant managers caused the situation to deteriorate once again, providing the Franco-Indian company with an opportunity to seek the termination of the contract. The deadlock was broken when Invitalia stepped in. A business plan was drawn up based on the relaunch of blast furnace production to finance the gradual transition to electric furnaces and the use of pre-reduced iron. However, matters took a turn for the worse once more and another period of special administration began due to disputes between public and private owners, further judicial interventions preventing the release of the plants from seizure, and a lack of funds for the investments required to relaunch production.

In the midst of negotiations between the steelworks’ administrators and Baku Steel, on 7 May last year a fire broke out in Blast Furnace 1 due to a rupture in a pipe, causing a gas leak. The Taranto Public Prosecutor’s Office entered three executives of the former Ilva into the register of suspects on charges of wilful failure to implement workplace safety measures, negligent arson and endangering property, and ordered the seizure of the blast furnace as evidence, prohibiting its use. Prompt action – within 48 hours – was required to prevent the molten cast iron, which would solidify following the seizure, from rendering the blast furnace unusable. However, nothing was done, and the blame game began. According to the company, the public prosecutor’s office failed to grant the necessary authorisations in good time; the public prosecutor’s office refutes the company’s claim and states that ‘almost all the activities requested by Acciaierie d’Italia were authorised after 22 hours’. Minister Urso also intervened in the dispute, clarifying that ‘it is not true that only 22 hours had elapsed. On the contrary, a full nine days had passed’. With only one blast furnace in operation, production capacity is reduced to less than half of what was already at a minimum, and the number of workers on short-time working increases. The Court of Milan, upholding the class action brought by local residents, shut down the last blast furnace. On 29 October, the Court of Cassation upheld the decision on the basis of the ‘precautionary principle’. Thus, 60 years of history come to an end.

Italian steel is not just about Taranto, but its fate affects everything and everyone. With an annual output of around 20 million tonnes (falling to 20 million in 2024), the Italian steel industry ranks second in the European steel market, behind Germany, and eleventh globally. However, the paralysis at Ilva has transformed Italy from a steel exporter into a net importer of over 5 million tonnes, considerably increasing its dependence. Between 2012 and 2023, production of long products remained stable (almost 12 million tonnes per year) whilst production of flat products fell by over a third. Italy’s demand will be met almost entirely through imports from abroad. Market share has, in the meantime, been taken by competitors from Northern Europe and, above all, by Chinese, Turkish and Indian firms. As early as 2023, Italy was the leading European destination for Chinese steel, with 3.8 million tonnes imported (over a third of the total).

Maintaining coal-fired blast furnaces is no longer viable, and sustainable steel production depends to a large extent on replacing the integrated process with electric furnace production. There is now a consensus on this, yet it is often overlooked that this would increase the demand for scrap metal, whilst Italy already imports a third of its national requirements for this material. Furthermore, secondary steel is not suitable for every type of production due to its quality. It is necessary to use direct reduced iron (DRI), which is obtained by processing high-quality iron heated by gas rather than coal; this requires an increase in imports. It can be produced using hydrogen, but this requires enormous investment and a massive amount of energy: one metric tonne of direct reduced iron (DRI) produced from green hydrogen requires 3 million watt-hours; in a steelworks such as Ilva, producing 3 million metric tonnes of steel per year, 9,000 billion watt-hours would be needed. If only renewable sources were used, this would require the entire Italian solar electricity output for 2023.

Available reports and historical data show that Europe’s blast furnace fleet is obsolete, comprising plants with an average age of 50 years, and requires extraordinary maintenance work and the constant implementation of advanced technologies to limit the production of harmful emissions inherent in the smelting of cast iron – a process that demands a medium- to long-term perspective and substantial resources. Furthermore, in 2034, with the highly controversial introduction of the Carbon Border Adjustment Mechanism (CBAM) – which is intended to protect European steel production from competition by non-EU producers who do not adopt the same standards – the scheme for free CO₂ emission allowances will come to a definitive end, leading to a rise in the price of coal-based steel. The way is therefore clear for electric arc furnaces and gas-fired pre-reduction furnaces, and, in the still very distant future, green hydrogen. But to realise this new model, coordinated and economically sustainable industrial and energy policy decisions are needed across the whole of Europe. And what about Taranto in the meantime?

Giovanni Arvedi, born in 1937 in Cremona, where he has lived ever since, heads a group worth 5.5 billion euros. He started out in the 1960s with welded pipes and developed a technology (direct integration between casting and steel) that transformed the steel industry worldwide. The group, founded by Omran Prakash Jindal – an intriguing figure as both an entrepreneur and a politician, who died in 2005 in a helicopter crash – is India’s third-largest steel producer, with a turnover of 5.4 billion dollars. It is chaired by Naveen Jindal, the youngest of four sons (there are nine brothers and sisters in total from two different mothers).

From what we can gather, Jindal and Arvedi’s plans envisage deep cuts. In either case, the workforce will not exceed five thousand. Both contenders have made certain thorny issues clear. The first is, in Arvedi’s words, “the approval of the plan by the institutions and the community of Taranto, without which it will not be possible to proceed”. The Italian entrepreneur is promising, if necessary, two zero-CO₂ electric furnaces, like the plant in Cremona. Jindal is currently planning for one furnace. When it was interested in Ilva with its blast furnaces, it had proposed taking over the whole company for one euro. Now it may invest no more than 300 million. All that remains is to wait, although Arvedi seems to be the favourite.

Three conclusions are possible – for the time being, as the saga is set to continue. If a company is truly strategic for the country, public intervention in the event of a severe crisis may become inevitable, but what form would it take, and what tools would be used? Expropriation, excessive recourse to special administration, or the misuse of social safety nets? The Ilva case has added to the confusion rather than clarifying matters. We also need an energy policy that takes account of its effects on industry. Just in the last few days, steel industry executives have been threatening a lock-out under the slogan ‘we can’t take it any more’. Last but not least, there is the question of striking a balance between values and public goods. The Court of Cassation has prioritised health over the economy, employment and growth. Others, such as Assonime, argue that “we need an evolutionary approach to safeguards, viewing the environment – on the one hand – no longer as a constraint on business operations but as a driver of development and innovation, whilst strengthening corporate culture towards sustainability. This is an inevitable transition”.

Meanwhile, Puglia will thrive on tourism amongst its trulli, country estates and seaside resorts. There’s also Baroque architecture in the Salento region – not just Salice wine – and there’s Old Bari too, but how can you compare that to Borgo Ignazia or the hairy mussels of the Gulf of Taras? Deep down, she was the winner: Barbara Lezzi had captured the spirit of this era, where a livelihood – even the smallest and most subsidised – has outstripped profit. As Luca Ricolfi says, a voice crying in the wilderness.