June 27, 2018 / 9:39 AM / 3 months ago

CORRECTED-Italy delays handover of Ilva steelworks to ArcelorMittal

(Corrects to Tuesday from Wednesday in para 3)

ROME, June 27 (Reuters) - Italy’s new government has postponed its planned handover of the heavily polluting Ilva steel plant, Europe’s largest, to ArcelorMittal by two and a half months to Sept. 15 as Rome seeks more time to rejig the terms of the deal.

The plant in southern Italy has been under state-supervised special administration since 2015, after magistrates said it must be cleaned up or closed. ArcelorMittal, the world’s largest steelmaker, agreed last year to buy it and fix its problems.

ArcelorMittal was due to take over Ilva on July 1, but Industry Minister Luigi Di Maio, whose party has long campaigned to close the plant, said on Tuesday evening the handover would be delayed.

“I am evaluating every possible impact related to the decisions I will have to make. Impact in environmental, social, economic and employment terms”, Di Maio said in a statement.

ArcelorMittal declined to comment.

Di Maio said Ilva would not need a bridge loan to cover its production costs in the coming months.

The industry minister is the head of the 5-Star Movement, which governs in coalition with far-right League. 5-Star has campaigned for years to close Ilva, but rather than tear up the deal with ArcelorMittal, he has begun talks with business leaders, local officials and trades unions.

The discussions point to the kind of compromise 5-Star will have to make with the pro-business League — which wants the plant to remain open — to maintain their partnership.

Ilva has been dogged by charges of corruption and environmental crime for years, charges that it denies.

In 2012, Italian authorities ruled that emissions from the plant had caused deaths, tumours and respiratory diseases. The state took full control in 2015 and about half Ilva’s annual 11 million-tonne capacity was eventually mothballed.

ArcelorMittal reached a 1.8-billion-euro deal with the previous Italian government to buy the troubled steelmaker.

It pledged to invest another 2.3 billion euros to clean up and modernise the plant but said it wanted to cut 5,500 jobs out of a total of 14,000 by 2023.

The Indian steel giant has still not reached an agreement on job cuts it could agree to and a delay could help it find a compromise with Rome’s help, one of the sources said.

At the March 4 general elections, the 5-Star movement won almost 50 percent of the plant’s host city, Taranto, one of the strongest showings for the movement anywhere in Italy.

“We intend to honour those extraordinary results,” Di Maio said. “Each decision will be taken with responsibility”. (Reporting by Massimiliano Di Giorgio, additional reporting by Maytaal Angel in London; writing by Giselda Vagnoni Editing by Mark Bendeich)

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