MT.AS - ArcelorMittal

Amsterdam - Amsterdam Delayed Price. Currency in EUR
16.33
+0.54 (+3.45%)
At close: 5:36PM CET
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Previous Close15.78
Open15.91
Bid0.00 x 0
Ask0.00 x 0
Day's Range15.59 - 16.38
52 Week Range11.20 - 21.77
Volume8979729
Avg. Volume7,920,297
Market Cap17B
Beta (3Y Monthly)2.36
PE Ratio (TTM)26.64
EPS (TTM)N/A
Earnings DateN/A
Forward Dividend & Yield0.18 (1.12%)
Ex-Dividend Date2019-05-16
1y Target EstN/A
  • Italy ready to take 18% stake in Ilva steel plant: paper
    Reuters

    Italy ready to take 18% stake in Ilva steel plant: paper

    The Italian state is ready to take an 18% stake in the troubled Ilva steel plant in southern Italy through a public agency, newspaper Il Messaggero reported on Sunday, citing a draft proposal to save the factory. Industry ministry officials will present the plan on Monday to steel firm ArcelorMittal, the daily said, in an attempt to convince it to scrap its threat to walk away from a 2018 deal to buy the plant in the city of Taranto. The factory directly employs around 8,200 workers in one of Italy's least prosperous areas.

  • Financial Times

    Italy poised to give emergency aid to steel industry

    The Italian government is ready to follow up emergency aid for Alitalia by injecting hundreds of millions of euros of loans into its struggling steel industry if Rome cannot find a private sector solution for a dual industrial crisis that has shaken its fragile coalition government. Stefano Patuanelli, minister for economic development, said in an interview with the Financial Times that Italy was prepared to intervene if necessary in its Ilva steel works with funds that would be likely to place Rome under further scrutiny from Brussels over possible illegal state aid to Italian companies.

  • Wait Until Donald Trump Hears About the Carbon Border Tax
    Bloomberg

    Wait Until Donald Trump Hears About the Carbon Border Tax

    (Bloomberg Opinion) -- Next week, the European Union’s leaders will commit to cutting net greenhouse gas emissions to zero by 2050. This historic pledge will require the continent to radically overhaul its entire economy, including a revolution in the production of steel, cement and chemicals — whose carbon emissions are particularly difficult to abate.None of this will happen, however, unless European companies feel able to invest in making themselves greener without suffering a loss of competitiveness. So the European Commission has been toying with the idea of a so-called “carbon border tax,” which would penalize imports from countries that don’t meet the same environmental standards.It’s a sensible idea but one that’s likely to cause the EU no end of grief. If U.S. President Donald Trump gets wind of a European “Green Deal” that includes a possible tax on American imports to help fight climate change (something he appears not to believe in), he’ll no doubt hit the roof. The climate crisis and trade conflicts are two of the world’s biggest challenges and they might be about to collide.(1)The logic of a carbon border tax is straightforward. To reach net zero emissions, Europe will have to expand the scope and effectiveness of its carbon trading system, which aims to to curb CO2 by making polluters pay. But if the price of purchasing pollution allowances keeps climbing (as it has been), businesses might decamp to countries with laxer emissions controls, a phenomenon known as “carbon leakage.” “If necessary, if there is carbon leakage, we will have to think about a carbon border tax,” European Commission president Ursula von der Leyen told the United Nations climate summit in Madrid this week. The risk of carbon leakage is much debated. There’s been little evidence of it so far but that’s probably because carbon prices have been low and heavy industry hasn’t had to expend much effort on cutting emissions; the power-generating sector has done most of the work.Things are about to become much tougher for Europe’s big industrial companies. In future, they’ll have to shut down their most polluting plants or make them clean. Much of the technology to do the latter is still in its infancy and is expensive.  By forcing non-EU businesses to pay the same carbon price as local companies via the border tax, the theory is that the EU could cajole other countries into following its climate lead, while ensuring a level  playing field for domestic industry. Naturally, large steelmakers such as ArcelorMittal SA are strongly in favor.Structuring and policing such a tax would certainly be complicated; measuring the carbon content of imported products isn’t simple. There are hints that it will be confined to just a few sectors at first. But the politics are even more nightmarish. Following the U.S. retaliation this week against  France’s digital tax, there’s a danger a carbon border tax would prompt Trump to ratchet up his trade crusades. German industry is particularly worried about this.The EU says any border tax would have to be compliant with World Trade Organization rules. But Brussels needs to tread carefully and Trump isn’t the only worry.A decade ago the bloc tried to impose a carbon tax on flights landing in the EU, regardless of where they took off. International condemnation was brutal and swift. Then Secretary of State Hillary Clinton wrote a letter strongly objecting to the EU’s unilateral approach. The U.S. Senate voted unanimously to block American airlines from complying. Amid fears that China would scrap a multi-billion dollar order for Airbus jets, Europe backed down.(2) Is the EU about to overstep again? Maybe it has no choice. “The world is a different place than it was 10 years ago,” says Andrew Murphy of the research group Transport & Environment. “With smart diplomacy there's no reason why a carbon border adjustment has to suffer the same fate as aviation did.”The urgency is certainly greater now and lots more countries have embraced emissions trading. But only last week China warned the EU against imposing a carbon tax on its exports.Europe shouldn’t let itself be dissuaded. Plenty of smart people think carbon border taxes are necessary, including Ben Bernanke and Alan Greenspan, both former heads of the Federal Reserve. As the birthplace of the industrial revolution, the continent has a unique responsibility to curb planet-heating carbon emissions, including those embedded in goods consumed here but produced elsewhere. So long as net carbon emissions keep rising the planet will keep getting hotter. Countries and companies leading the way shouldn’t be punished for tackling this.(1) For more see this Centre for European Reform paperand this Bruegel blog postand paper. Carbon border taxes are also mentioned in the United Nations' Emissions Gap reportand by the Energy Transitions Commission.(2) Only intra-European flights were subject to emissions trading.To contact the author of this story: Chris Bryant at cbryant32@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • How the Steel Industry Made Millions From the Climate Crisis
    Bloomberg

    How the Steel Industry Made Millions From the Climate Crisis

    (Bloomberg Opinion) -- Europe’s steel industry is in crisis again and there’s no shortage of reasons for all the financial losses and job cuts. Stagnating demand, surplus production capacity, higher iron ore prices and a surge in imports caused by trade conflicts are just some of them.But when Tata Steel Ltd. announced 3,000 job losses at its European arm this week, the company also pointed to a “significant increase” in the cost of carbon emission permits.Blaming the CO2 price has become a common yet questionable refrain in the industry. ArcelorMittal offered a similar excuse when it announced big production cuts in May. British Steel Ltd.’s collapse that same month was also linked to its obligation to purchase expensive carbon credits.The reality looks rather different. Steel is responsible for about 7% of global emissions but even today the sector is mostly shielded from having to buy carbon pollution permits in Europe. Steelmakers are in a tight spot but they shouldn’t grumble about a policy that’s been lucrative for them in the past and whose purpose is to help them clean up their act.To recap, the EU’s emission trading system was created more than a decade ago to help mitigate the climate crisis by making polluters pay. Utilities, industrial plants and airlines are required to obtain permits to match how much they pollute. The reason for the industry’s complaints now is that the cost of those allowances has more than trebled in the past two years after the European Union tweaked the system.That’s theoretically difficult for steelmakers because they emit almost two metric tons of CO2 for every ton of steel produced. A roughly 50-euro ($55) CO2 price for each marginal ton of output is significant because the spread between steel prices and the cost of the raw materials needed to make it has fallen to about 250 euros a metric ton. “Considering that steel makers are barely profitable the pressure from CO2 prices is substantial,” says Benjamin Jones of CRU, a metals and mining consultancy. Yet all the steelmakers’ complaints ignore an important financial safety net for the industry. Because of the perceived threat of so-called “carbon leakage” (where companies decamp to places with cheaper pollution costs) the least polluting steelmakers still receive free allowances that cover 100% of their emissions.(1)“Given how generous free allocation has been, steel should be among the industries hurting the least from the carbon price,” says Jahn Olsen, a carbon analyst at BloombergNEF.Furthermore, the production cuts after the 2008-2009 recession left steelmakers with large surpluses of emission permits which they were free to keep or sell at a profit. While the extent of the industry’s windfall profit from this is disputed, one study found it could be 8 billion euros ($8.8 billion). Some steelmakers are still benefiting today.Tata Steel’s European arm generated 211 million pounds ($273 million) of income from selling surplus allowances in the fiscal year to March, its annual accounts show. It’s pretty bold of the steelmaker to call out the rising cost of pollution permits when it’s just booked a big profit from them. There are echoes here of what happened to British Steel,(2) which sold emission permits only to discover later that it needed them.(3) “The European steel sector is in a tough spot but to blame carbon pricing is disingenuous,” says Sam Van den plas, policy director at Carbon Market Watch. For now the largest and most technically advanced steelmakers probably aren’t having to fork out much for allowances.This will change gradually after 2021 when the so-called fourth phase of emissions trading begins. But the EU still expects to hand out 6.3 billion free permits to polluters during that period, worth more than 150 billion euros at current prices. For now ThyssenKrupp says the impact from carbon pricing is “marginal” and will probably remain so next year. It warns though of “considerable risks” in the post-2021 period.Tata says it expects to spend more than last year’s 211 million-pound gain on permits in coming years, but didn’t provide more detail.ArcelorMittal says it might have to pay out 5 billion euros between 2021 and 2030 at the current CO2 price. On an annual basis that’s about one-eighth of its analyst-estimated operating profit for 2021. This sounds a lot but it assumes the company makes no improvements in cutting pollution.Emission cuts by companies bound by the EU trading system have been fairly impressive but recent progress has come mostly from the power sector. That makes the bloc’s task of reaching climate neutrality by 2050 — something ThyssenKrupp and others have signed up to —  more difficult. Excluding power plants, the largest individual sources of carbon pollution in Europe are all steelworks.  In fairness, there’s an absence of carbon-cutting technologies in sectors like steel and cement. Techniques such as replacing coal with hydrogen in steel production show promise but most are still being trialed. Making them viable commercially would require a higher carbon price and massive investments, including on huge new sources of renewable electricity. Yet the free carbon allowances for steel companies probably didn’t motivate them enough to find more sustainable production methods. In her resolve to redouble the EU’s pollution-cutting efforts, European Commission President Ursula Von der Leyen has floated the idea of a carbon border tax on imports into the bloc to make sure domestic producers aren’t unfairly penalized.The feasibility of such a tax is unproven: Measuring the carbon content of manufactured good is tricky and the levy would have to reflect the fluctuating price of allowances. Even if it complies with World Trade Organization rules, a carbon tax might inflame trade tensions with the U.S.Naturally the steelmakers think a border tax is a great idea as it would expose them to less competition by deflecting “dirty” imports. Astonishingly, they’re lobbying to keep their free pollution allowances even if non-EU steelmakers are forced to pay the bloc’s carbon price. The local industry argues that its non-EU exports would become uncompetitive if it had to pay the full cost of permits while investing in emission-cutting innovations. Its lobbying sounds dangerously like an industry trying to have its cake and eat it.(1) The data show ArcelorMittal and Tata Steel receive allowances that exceedtheir emissions. However some of these must be handed to the power sector to account for the waste gases they process.(2) A company formed of assets sold by Tata Steel to Greybull Capital in 2016(3) Tata Steel sold the permits ahead of a planned merger with ThyssenKrupp's steel business which was then blocked on anti-trust grounds.To contact the author of this story: Chris Bryant at cbryant32@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Italy to restart talks with ArcelorMittal over ailing Ilva steel plant
    Reuters

    Italy to restart talks with ArcelorMittal over ailing Ilva steel plant

    Steelmaker ArcelorMittal has agreed to immediately restart talks with the Italian government over the future of the Ilva plant, Prime Minister Giuseppe Conte said after a four-hour meeting with the company. Rome and ArcelorMittal are on the brink of a legal battle as the latter tries to walk away from a 2018 deal to buy the steel plant in the southern city of Taranto, which directly employs around 8,200 workers in one of Italy's least prosperous areas. India-based ArcelorMittal has blamed its threatened exit on the Italian government's move to scrap a guarantee of legal immunity from prosecution over environmental risks while it carried out the clean-up at Ilva's heavily polluted site.

  • India Seizes Troubled Lender to Limit Shadow Bank Crisis Fallout
    Bloomberg

    India Seizes Troubled Lender to Limit Shadow Bank Crisis Fallout

    (Bloomberg) -- India seized control of a second non-bank lender, stepping up efforts to contain the economic fallout from the nation’s shadow banking crisis.The Reserve Bank of India removed the management of troubled home-loan provider Dewan Housing Finance Corp. and will initiate bankruptcy proceedings, it said late Wednesday.The surprise move reflects efforts by Prime Minister Narendra Modi’s government to limit contagion from Dewan’s debt problems into the rest of the banking system, at a time when the economy is slowing. Since a series of defaults at a large infrastructure firm thrust shadow lenders into the spotlight last year, Dewan and others have struggled as banks and bond investors choked off access to new funding.“The intention and the message is very clear from the regulator and the government to all corporates that any defaulter will be dealt with very strictly,” said Siddharth Purohit, banking analyst at SMC Global Securities Ltd.Read a QuickTake on India’s shadow banking crisisA big player in mortgage lending, Mumbai-based Dewan has total debt of about $12.5 billion. Other shadow lenders include Altico Capital India Ltd. and Anil Ambani’s Reliance Home Finance Ltd.Dewan’s share price has plummeted more than 90% so far this year.The shadow lender had been in talks with banks to restructure its debt, and had been seeking a strategic partner to help fund an infusion of new equity. But governance concerns had hindered progress.Why a health check on India’s shadow banks points to trouble The removal of Dewan’s management and the initiation of bankruptcy proceedings offer a way forward in resolving the lender’s debt problems. It follows soon after the government’s move last week to allow financial firms to be placed into the nation’s bankruptcy court, which previously only heard cases involving non-financial companies.India’s insolvency regime was also bolstered last week by a Supreme Court ruling that paved the way for ArcelorMittal’s $5.9 billion takeover of Essar Steel India Ltd. and empowered banks to set the terms of the distribution of sale proceeds among Essar’s creditors.Still, the slow pace of bankruptcy procedures in India may suggest there’s a long road ahead for Dewan’s creditors. Arcelor battled for more than a year to take over Essar. While its offer was approved by a bankruptcy tribunal in March under the insolvency process, the payment had been kept on hold prior to last week’s Supreme Court ruling due to a dispute among lenders on the distribution of funds.\--With assistance from Swansy Afonso and Debjit Chakraborty.To contact the reporters on this story: Suvashree Ghosh in Mumbai at sghosh186@bloomberg.net;Rahul Satija in Mumbai at rsatija1@bloomberg.netTo contact the editors responsible for this story: Unni Krishnan at ukrishnan2@bloomberg.net, Abhay SinghFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Reuters

    UPDATE 1-Italian police search ArcelorMittal offices over Ilva probe

    Italian police are searching ArcelorMittal's offices in Milan and the southern city of Taranto in an investigation into the troubled Ilva steel plant, which the company wants to hand back to the government, ArcelorMittal said in a statement. A police spokesman did not immediately respond to a request for comment. The Italian government filed an urgent court appeal on Friday to try to stop ArcelorMittal walking away from a 2018 deal to buy the heavily polluting Ilva plant, which employs some 8,200 workers in an area of high unemployment.

  • ArcelorMittal willing to re-commit to Ilva steel plant on three conditions: paper
    Reuters

    ArcelorMittal willing to re-commit to Ilva steel plant on three conditions: paper

    ArcelorMittal is drafting a plan to re-commit to the 2018 deal, under which it bought the troubled Ilva steel plant in southern Italy, on three conditions, Il Messaggero daily reported on Monday. After withdrawing from the contract, the world's biggest steel maker is drafting a proposal for Italy's government in which it will demand the reintroduction of legal immunity, the possibility to revise its industrial plan and the layoff of 5,000 workers. Italian Prime Minister Giuseppe Conte has postponed a meeting with ArcelorMittal's Lakshmi Mittal, due this week, hoping that a Milan court will already decide on an appeal filed by Rome last Friday, Il Messaggero said.

  • ArcelorMittal willing to re-commit to Ilva steel plant on three conditions - paper
    Reuters

    ArcelorMittal willing to re-commit to Ilva steel plant on three conditions - paper

    ArcelorMittal is drafting a plan to re-commit to the 2018 deal, under which it bought the troubled Ilva steel plant in southern Italy, on three conditions, Il Messaggero daily reported on Monday. After withdrawing from the contract, the world's biggest steel maker is drafting a proposal for Italy's government in which it will demand the reintroduction of legal immunity, the possibility to revise its industrial plan and the layoff of 5,000 workers. Italian Prime Minister Giuseppe Conte has postponed a meeting with ArcelorMittal's Lakshmi Mittal, due this week, hoping that a Milan court will already decide on an appeal filed by Rome last Friday, Il Messaggero said.

  • Common Sense Wins in India Bankruptcy Case
    Bloomberg

    Common Sense Wins in India Bankruptcy Case

    (Bloomberg Opinion) -- Two- and-a-half years after the Indian central bank took the highly unusual step of directing banks to put 12 large corporate debtors into bankruptcy, the most closely watched of the “distressed dozen” cases has finally been resolved.With the Supreme Court in New Delhi clearing the decks for the sale of Essar Steel India Ltd., the Ruia family has accepted defeat. Control of the 10 million-tons-a-year integrated plant in western India will pass to ArcelorMittal, which will pay banks 420 billion rupees ($5.9 billion), or 90% of their claims.This final episode of a drawn-out legal saga, in which the Ruias made multiple attempts to hold on to their prized asset, was a nail-biter. At the last moment, the bankruptcy tribunal’s appellate authority had inexplicably jumped into the fray and ordered that more of ArcelorMittal’s money be given out to unsecured operational creditors and less to secured financial lenders.India’s $200-billion-plus bad debt mess is starting to attract serious global capital from pension and sovereign funds. Had expected recovery rates of 90% shriveled to 60%, private equity funds assembling this stock of patient money to take over secured lenders’ exposure would have fled. Thankfully, the court restored the power of the creditors’ committee to decide who gets what.It’s been a costly delay. When the Reserve Bank of India referred large cases to new bankruptcy tribunals, it was hoping to solve 25% of the country’s bad-loan problem in 270 days. There was interest among potential buyers, particularly for steel plants, because global metals demand was stabilizing. But with missed deadlines, lengthy litigation and suspected fraud holding back asset sales, liquidation has emerged as the default option, with only 15% of closed insolvency cases ending in a resolution plan. A lot has changed in India’s corporate distress landscape between 2016, when India promulgated its bankruptcy law, and now. For one thing, global demand for steel — and steel assets — is starting to sag. That isn’t all. With practically all sectors of India’s economy facing a demand funk, there’s trouble everywhere from real estate and roads to power and telecom.Each industry comes with its own unique challenges. In residential real estate, it’s the homeowners’ interest that makes creditor coordination difficult. In telecom, the difficulty comes from exorbitant government demands for spectrum fees. The danger of a voluntary bankruptcy filing by Vodafone Idea Ltd. has everyone from investors to the government worried. The mobile operator posted a $7.1 billion quarterly loss, the worst in India’s corporate history. A new complexity is that creditor institutions themselves — from shadow lenders to small deposit-taking banks — are becoming insolvent, prompting India to extend the bankruptcy law to nonbank lenders as well. This quick fix would further weigh on a system creaking under its case load. A steel plant can preserve value through a lengthy in-court bankruptcy by utilizing its fixed capacity. A lender has to continuously make new loans to stay in business. Without the trust of the financial markets, its enterprise value very rapidly falls to zero. Early liquidation is the best possible outcome for an insolvent lender’s creditors seeking to extract value, but it’s also the scenario that poses the biggest risk to stability of the existing financial system.The current law can’t solve this dichotomy. Rather than overburdening it, India must keep the bankruptcy tribunal focused on what it can actually handle. A recent example of overreach is the start of an insolvency petition against Aviva Plc’s local life insurance joint venture for not paying its landlord. Such things used to happen in Indonesia, where a Jakarta commercial court declared Canadian insurance firm Manulife Financial Corp.'s Indonesian unit bankrupt in 2002, and followed it up two years later by holding Prudential Plc’s local business insolvent. A higher court had to reverse those rulings. By setting right the balance between secured and unsecured lenders, the Essar judgment has scored a win above all for common sense. The verdict will rekindle hope in the integrity of India’s bankruptcy process, but it will take a lot more work to allay concerns about its effectiveness.To contact the author of this story: Andy Mukherjee at amukherjee@bloomberg.netTo contact the editor responsible for this story: Patrick McDowell at pmcdowell10@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • The Steel Conundrum That May Wreck Italy’s Fragile Coalition
    Bloomberg

    The Steel Conundrum That May Wreck Italy’s Fragile Coalition

    (Bloomberg) -- Emergency, all hands on deck!That was the thrust of a remarkable letter Italian Prime Minister Giuseppe Conte sent to his ministers earlier this week, calling on them to put aside squabbles and come up with “proposals, projects, solutions or specific measures” to rescue a bankrupt steel mill in the southern city of Taranto.Conte’s unusual -- some might say desperate -- step highlights the pressure on his fragile coalition. The premier is scrambling for a solution to an industrial crisis that’s dominated front pages for weeks while providing fodder for the opposition.Worse still, it was Conte’s own allies who precipitated the crisis in the first place, after they passed a law that prompted ArcelorMittal, the steel giant that had agreed to invest and take over the plant, to change its mind and pull out of the deal.Yet despite an economy that’s been stumbling for decades, Italy’s government has time and again stepped in to bail out ailing companies. What’s different this time is that the Taranto plant has become a life-or-death dilemma for the government.Italy won’t permit the shutdown of the steel mill, according to an emailed statement from Conte Friday. He said ArcelorMittal’s decision is a “clear violation of contractual commitments.”How Did We Get Here?In 1995 Italy sold the Taranto mill, built with public funds in the 1960s, to the Riva family, but it took back control in 2012 after judges ruled the owners were culpable for environmental damage from the plant.After exhaustive negotiations, ArcelorMittal agreed to lease and eventually buy the plant, investing 2.4 billion euros ($2.7 billion) to modernize the facilities and reduce toxic emissions.Under the original agreement, which also included some job cuts, ArcelorMittal was covered by a law shielding managers from criminal charges based on environmental or health-related violations.What Sparked the Current Crisis?Conte’s majority, egged on by some Five Star Movement lawmakers, voted last month to remove the immunity clause, even though ArcelorMittal had said it wouldn’t proceed without that protection. The steelmaker made good on its promise this month, sending an official notice of intention to terminate the deal.Now, Conte is desperate to bring ArcelorMittal back to the table, and daily Il Messaggero reported he’s ready to make concessions -- including restoring immunity -- in order to entice the Luxembourg-based steelmaker to remain at Taranto.But there’s no sign the company wants to reconsider. Steel demand in the European Union is expected to drop the most since 2012 and prices have hit multi-year lows.Both sides have sued and, if the usual Italian timelines apply, legal battles could drag on for years. For now, state-appointed administrators have until Dec. 4 to take responsibility for the mill’s operations and its employees.Adding urgency to the situation, ArcelorMittal plans to shut down all of the plant’s furnaces by Jan. 15, trade union Fim-Cisl said. In a sign that the issue may be hitting confidence, the spread between Italian 10-year government bonds and their German counterparts widened by as much as 15 basis points Thursday and finished the day at 168 basis points.What’s at Risk for the Government?Nothing short of a full collapse. While the premier managed this summer to stitch together the coalition of Five Star and the center-left Democrats, plus some minor parties, his second cabinet has been no better at burying its differences -- particularly over the budget -- than its predecessor was.The steel plant has only made things worse. The dilemma over what to do about the mill has exposed deep rifts between the coalition allies and within Five Star, which has strong environmentalist roots.Five Star and the Democrats are at loggerheads over whether to restore immunity, while Five Star leader Luigi Di Maio is fighting an internal battle with party rebels who want the government to stand tough against ArcelorMittal.What Happens Now?The Conte letter suggests that solutions, at least for now, are in short supply. Every option carries a high political cost and the coalition, after less than three months in office, is looking dangerously divided.The Italian media has reported on a number of “Plan B” scenarios for the Taranto plant, including a government-backed solution involving state lender Cassa Depositi e Prestiti SpA and unnamed partners. Some officials have called for wholesale nationalization, but with its badly stretched finances, can Italy afford that?Five Star, still smarting from defeats in other environmental battles, has made ending the noxious emissions from Taranto a core policy goal. And with its poll numbers in a downward spiral, the party has little appetite for compromise. It’s unclear if its lawmakers would back any kind of renewed immunity for ArcelorMittal’s managers.The company is planning to shut all the works at Taranto by Jan. 15. Allowing the plant to close would mean about 20,000 lost jobs. That could spark a ripple effect throughout the country’s underdeveloped south -- Five Star’s stronghold.A closure could also shave 0.2% from gross domestic product, a study by the Svimez think tank said. That’s half of Italy’s 2020 growth, according to European Commission forecasts.Waiting in the wings: the opposition led by Matteo Salvini. The head of the rightist League party has been skewering the government for mishandling the plant issue -- and his poll numbers are running close to the all-time high reached last summer.(Updates with Conte comment in 6th paragraph.)\--With assistance from Elena Mazneva and John Follain.To contact the reporters on this story: Ross Larsen in Rome at rlarsen2@bloomberg.net;Alessandro Speciale in Rome at aspeciale@bloomberg.netTo contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Guy CollinsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Arcelor’s $5.9 Billion Purchase to Aid India Bad Loan Clean Up
    Bloomberg

    Arcelor’s $5.9 Billion Purchase to Aid India Bad Loan Clean Up

    (Bloomberg) -- ArcelorMittal’s $5.9 billion takeover of an Indian steel mill is a shot in the arm for lenders, which have been armed with legal backing to tackle bankruptcies in a country that has one of the world’s worst bad-loan ratios.Friday’s decision by the Supreme Court not only ended tycoon Lakshmi Mittal’s long wait to enter the world’s second-biggest steel market, but also empowered banks to set the terms of the distribution of sale proceeds between different creditors. The court allowed Arcelor to pay creditors for Essar Steel India Ltd. and scrapped a bankruptcy appellate tribunal’s order that gave secured and unsecured lenders equal right over the proceeds.“There is no principle of equality between secured and unsecured creditors,” Justice Rohinton F. Nariman said while reading out the judgment in court on Friday. Bankruptcy courts don’t have a say in deciding the distribution of funds between creditors. They can only examine the legality of the resolution plan approved by the panel of lenders of an insolvent company, the court ruled.The verdict is likely to reduce legal wrangling between creditors and accelerate resolutions. The court’s decision along with rules unveiled by the government on Friday to help lenders recover loans due from large shadow lenders will attract investors who were getting wary of the nation’s bankruptcy process.“The Supreme Court has made it very clear that the decision taken by the committee of creditors is final and binding,” Prashant Kumar, chief financial officer of the State Bank of India, the biggest lender to Essar, said in an interview with BloombergQuint. “This clarity is not only important for the Essar case, it would also be very important for all other cases which go through the process of IBC,” he said referring to the law known as the Insolvency and Bankruptcy Code.The verdict is likely to be the final approval in a more than yearlong battle by Arcelor to take over Essar, which would make the Luxembourg-based mill India’s fourth-largest producer. While companies can seek a review of the decision by the same bench of judges, the success of review petitions is rare.The world’s largest steelmaker, ArcelorMittal, and its partner Nippon Steel Corp. had offered to pay 420 billion rupees ($5.9 billion) in cash to creditors and pump another 80 billion rupees in the mill last year. While that offer was approved by a bankruptcy tribunal in March under the insolvency process, the payment was kept on hold by the Supreme Court after a dispute arose between lenders on the distribution of funds.The decision to place secured creditors like banks at par with unsecured ones such as suppliers had raised concerns from banks to foreign funds including SC Lowy who said in July that the appellate tribunal’s verdict set a “very dangerous precedent.” The latest move by the Supreme Court alleviates these fears and will be good for the banks, according to the Hong Kong-based company.“It’s the right judgment,” Theron Alldis, Asia loan trader at SC Lowy, said in an email response to queries after the latest verdict. “For distressed debt investors, it gives the certainty to commit capital” and that is important as Indian banks can now again access offshore capital to reduce their non-performing assets, he said.India is trying to attract foreign capital to its bad loan cleanup, as it battles the worst nonperforming loan ratio among the world’s major economies. However, multiple legal challenges between former owners, lenders, bidders and in some cases anti-money-laundering agencies have deepened conflicts between the bankruptcy law and other regulations that pre-date them.“The apex court has given due recognition to the commercial wisdom of the lenders and has made the committee of creditors the king,” said Sapan Gupta, partner at law firm Shardul Amarchand Mangaldas & Co. “This will boost the success of the IBC manifold and attract investors to stressed assets.”India’s currency, and creditors to Essar extended gains after the ruling. The rupee rose 0.3%, while State Bank of India added 5.2% and Canara Bank surged as much as 7.2%. Syndicate Bank, which expects 12 billion rupees of recovery from the sale, also gained 3.5%. Arcelor jumped as much as 3.1% in Amsterdam.Slowing GrowthArcelor, which first bid for Essar when the local steel industry was booming, is set to take possession of the Indian plant at a time the South Asian nation’s economic growth slows to a six-year low and steel consumption expansion almost halves. Arcelor is also battling a slowdown in demand globally, idling capacities worldwide and flagging that it could sell as much as $2 billion in non-core assets over the next two years to lower debt.“For Arcelor, there isn’t any right or wrong time to enter India,” and to have a mill of Essar’s scale would be a reasonable addition for Arcelor’s portfolio over a period of time, Vishal Kulkarni, executive director at Nomura Holdings Inc., said by phone from Hong Kong.“India is probably one of the only few spots where steel demand is relatively healthy and in a positive territory, whereas the other markets that Arcelor is in are barely growing,” he said. “Indian margins are weaker than the recent high levels but they are not the weakest in the world.”The Supreme Court on Friday also said the timeline for insolvencies can be extended in exceptional cases and the 330-day deadline prescribed by the government for completing insolvencies, including the litigation period, can’t be mandatory.To contact the reporters on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net;Upmanyu Trivedi in New Delhi at utrivedi2@bloomberg.netTo contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Alpana Sarma, Arijit GhoshFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bloomberg

    Sensex Completes Third Week of Gains as Investors Weigh Outlook

    (Bloomberg) -- India stocks advanced, with the benchmark index completing its third week of gains, on investor expectation that lower borrowing costs will boost the outlook for corporate profits.Global sentiment for riskier assets was also buoyed by renewed U.S.-China trade-deal prospects.The S&P BSE Sensex advanced 0.2% to 40,356.69 in Mumbai, clocking its longest weekly winning streak since the end of September. The measure had climbed as much as 0.9% earlier in the session before a late sell off. The NSE Nifty 50 Index added 0.2%. Most markets in Asia rose as optimism grew for Beijing and Washington to close an initial trade deal, with the MSCI Asia Pacific Index climbing 0.5%.Locally, earnings for companies were better than expected. Thirty-one of the Nifty 50 firms either met or exceeded analyst estimates, while results for six were incomparable, according to data compiled by Bloomberg. Investors in India yesterday shrugged off quickening inflation in the expectation that borrowing costs will continue to be eased.Strategist View“With earnings over, investors will focus on economic growth data due later in the month to gauge the central bank’s stance on reducing interest rates further,” said Vineeta Sharma, head of research at Narnolia Financial Advisors Ltd. “We advise buying corporate banks and select consumer stocks.”The NumbersSeven of 19 sector sub-indexes compiled by BSE Ltd. advanced, led by a gauge of telecom companiesTelecom services providers surged amid expectations that government may provide moratorium to companies on the pending spectrum paymentsGauge of banking stocks added 0.9% after the Supreme Court allowed ArcelorMittal to acquire Essar Steel, and ruled that the steelmaker’s financial lenders get preference over operational creditors such as suppliersFortis Healthcare Ltd plunged 7.9% after the top court refused to remove a barrier for its takeover by Malaysian operator IHH Healthcare BhdSBI contributed the most to the Sensex advance, increasing 5.2% while Bharti Airtel had the largest gain, rising 8.4%ITC Ltd was the biggest drag on the benchmark index, declining 1.3% while Hero MotoCorp had the biggest drop, falling 1.9% Market-related storiesBest Days For Emerging Debt Could Be Over on Fewer Rate CutsIndian Consumer Spending Falls First Time in Four Decades: BSVodafone India Seeks Aid After Reporting Record $7 Billion LossTo contact the reporter on this story: Nupur Acharya in MUMBAI at nacharya7@bloomberg.netTo contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Margo Towie, Anto AntonyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Supreme Court clears path for ArcelorMittal to acquire Essar Steel
    Reuters

    Supreme Court clears path for ArcelorMittal to acquire Essar Steel

    The Supreme Court cleared the path on Friday for steelmaker ArcelorMittal SA to take over bankrupt Essar Steel, following a legal tussle that has dragged through multiple courts for over two years. The highest court said operational creditors could not be treated on a par with financial creditors of a bankrupt company, in a ruling that provides relief to lenders and sets a precedent that could speed-up the resolution of other insolvency cases. Banks had moved to the Supreme Court earlier this year after an appellate court judgment put the claims of Essar's operational creditors on a par with those of its lenders.

  • Nationalising Italy's Ilva steel plant would cause trouble with EU: Deputy Econ Min
    Reuters

    Nationalising Italy's Ilva steel plant would cause trouble with EU: Deputy Econ Min

    Nationalising the troubled Ilva steel plant would create problems with the European Commission, and the government should work on a "market solution" if ArcelorMittal pulls out of a contract to take over the site, Italy's Deputy Economy Minister Antonio Misiani said on Tuesday. ArcelorMittal said last week it was withdrawing from a 2018 deal to acquire Ilva's site in the southern city of Taranto, blaming its decision on a government move to scrap immunity from prosecution over environmental damage in the area.

  • Thomson Reuters StreetEvents

    Edited Transcript of MT.AS earnings conference call or presentation 7-Nov-19 2:30pm GMT

    Q3 2019 ArcelorMittal SA Earnings Call

  • Moody's

    ArcelorMittal -- Moody's changes outlook on ArcelorMittal's ratings to negative; affirms Baa3 rating

    Moody's Investors Service ("Moody's") has today affirmed the Baa3 long-term issuer rating of ArcelorMittal ("the group"), the world's largest steel producing company. Concurrently, Moody's affirmed the short-term issuer rating of P-3, the group's senior unsecured instrument rating of Baa3, the P-3 short-term rating on the group's Commercial Paper, the (P)Baa3 senior unsecured rating on its medium-term notes (MTN) programme and senior unsecured shelf, and (P)P-3 other short-term ratings. "We are changing the outlook on ArcelorMittal's ratings to negative, reflecting the group's sharp earnings decline this year in the context of sluggish end-market demand, and deteriorating steel spreads", says Goetz Grossmann, Moody's lead analyst for ArcelorMittal.

  • Reuters

    UPDATE 2-Italy ready for 'legal battle of century' with ArcelorMittal -Conte

    The Italian government will fight ArcelorMittal in the courts if it goes back on a pledge to buy steelmaker Ilva, but Rome still hopes to avoid a bruising legal showdown, Prime Minister Giuseppe Conte said on Thursday. "We would all lose if there were a legal battle, but should it happen, it will be the legal battle of the century," Conte, himself a lawyer, told state television RAI in an interview. ArcelorMittal said this week it was withdrawing from a deal to buy Ilva, blaming its decision on a government move to scrap previous guarantees of legal immunity during a massive clean-up operation at Ilva's huge Taranto plant.

  • Italy ready for 'legal battle of century' with ArcelorMittal - Conte
    Reuters

    Italy ready for 'legal battle of century' with ArcelorMittal - Conte

    The Italian government will fight ArcelorMittal in the courts if it goes back on a pledge to buy steelmaker Ilva, but Rome still hopes to avoid a bruising legal showdown, Prime Minister Giuseppe Conte said on Thursday. "We would all lose if there were a legal battle, but should it happen, it will be the legal battle of the century," Conte, himself a lawyer, told state television RAI in an interview. ArcelorMittal said this week it was withdrawing from a deal to buy Ilva, blaming its decision on a government move to scrap previous guarantees of legal immunity during a massive clean-up operation at Ilva's huge Taranto plant.

  • Trade optimism fuels new four-year high in European stocks
    MarketWatch

    Trade optimism fuels new four-year high in European stocks

    European stocks rose on Thursday for a fifth straight session, getting a boost from a report about the U.S. and China agreeing on how they would remove tariffs.