WARSAW (Reuters) - ArcelorMittal Poland said on Monday it planned to halt its blast furnace and steel plant in Krakow in September, due to rising carbon emission costs and surging power prices.
ArcelorMittal did not say how long the shutdown would last at the Krakow furnace, which is in southern Poland. The company said this would partly depend on the situation in the steel market.
ArcelorMittal Poland is the country's biggest steel producer and owns five steel plants and a coke plant, the biggest of its kind in Europe.
"We have reluctantly made an uneasy decision to temporarily idle the operations of the primary part of our Krakow unit, because our competitive position is undermined by the costs of CO2 emission rights (...) at a time of low demand due to weakening market conditions," ArcelorMittal said in a statement.
"In addition, energy costs in Poland are among the highest in the EU."
The company, which employs over 11,000 people in Poland, said that the decision to shut the Krakow blast furnace and steel plant would affect 1,200 people, who will be transferred to other jobs or granted an idle time pay.
Poland generates most of its electricity from burning highly-polluting coal and rising carbon emission prices in the European Union resulted in surging power prices in Poland last year.
Warsaw approved legislation in December to cap household power prices but has yet to amend its plans for an industry price cap to ensure they do not violate European Union rules on state aid.
ArcelorMittal, which is a major client of Poland's state-run coking coal producer JSW, also said that its purchases from JSW should remain stable, as it does not expect changes in the functioning of its coke plant.
Shares in JSW fell by 0.8 percent by 1445 GMT.
(Reporting by Agnieszka Barteczko and Wojciech Zurawski, editing by Louise Heavens and Jane Merriman)