<article><p class="lead">Italian steelmaker Ilva will restart a blast furnace at Taranto at the end of January or in early February under the new plan between the government and ArcelorMittal. </p><p>Discussions between the two parties are finally seemingly coming to a close, with an expected 50-50 split of ownership of the new company, which will control Ilva. Many market participants have lost interest in the story over the years, as back and forth negotiations drew the asset to its lowest production levels, while unreliable delivery terms meant only some buyers were considering purchasing from the mill. </p><p>But the mill's potential — especially in the current supply-tight market — has always had large implications for the direction of prices.</p><p>Under the plan, Arcelor and the Italian government will be equal shareholders until 2022, after which the government will become the majority shareholder, with a rumoured 60pc share. </p><p>Production is to be ramped up to 6mn t/yr initially, and later to 8mn t — market participants estimate the current output at 2mn-2.5mn t/yr. The workforce is to remain at over 10,000 employees — this has been one of the main divisive topics over the years, as ArcelorMittal insisted that it needs to cut jobs, while the government, pressured by unions, has maintained that layoffs are unacceptable. Many see the plan as unlikely, and are sceptical as to whether this will be achievable, as at 10,000 employees it is not financially viable to produce 6mn-8mn t/yr. </p><p>Now that Ilva operates as a separate commercial entity from ArcelorMittal, participants have been curious about the pricing and sales strategy of the new company. Sources suggest that Ilva's management does not intend to follow ArcelorMittal's strategy and price hike announcements, but tht it will work more flexibly and quote according to capacity and demand levels.</p><p>Although buyers have welcomed the split between Ilva and ArcelorMittal, expecting that an extra player in the market would result in more competitive prices, there are still concerns about how reliable deliveries are going to be from the plant, which has experienced delays of up to six months in the past. </p><p>Ilva's plant in Novi Ligure, which produces hot-dip galvanised steel for the automotive sector, will also be restarting, although only after an investment required to start up the unit.</p><p class="bylines"><i>By Lora Stoyanova</i></p></article>
