The Italian government has placed Acciaierie d’Italia (ADI) into extraordinary administration, thereby passing control of the company to government appointed commissioners, headed by Giancarlo Quaranta.

“This ends ArcelorMittal’s involvement in ADI, which started in 2018,” ArcelorMittal says in a note sent to Kallanish. Since that time, ArcelorMittal has funded an €800 million ($865m) environmental programme that ensured ADI’s compliance with the Integrated Environmental Authorisation set out by the Italian government, as well as €1.2 billion in upgrading equipment.

ArcelorMittal says it put forward “pragmatic” proposals to address the discrepancy in capital investment between itself and fellow ADI shareholder, state-owned Invitalia, and then offered to sell its shareholding in ADI to Invitalia. However, neither was successful.

“Had ADI been able after April 2021 to access traditional debt financing and been able to raise the working capital required to fund its ongoing needs, rather than relying on equity injections from its shareholders as its sole source of capital, this situation could have been avoided,” ArcleorMittal notes.

“Unfortunately, the conditions precedent to allow ADI to convert its lease of the assets into a formal purchase – conditions that ADI has no control over, were originally set to be completed before May 2022, and subsequently extended to May 2024 – remain unmet today,” it continues.

“ADI’s financial situation has been further impacted by the Italian Government delivering less than one-third of the €2 billion of support measures it offered to at the time the public-private partnership with Invitalia was established,” it adds.

The situation was complicated by the temporary removal of criminal immunity applicable during the implementation period of the environmental investment programme, the demand environment during the Covid crisis and the energy crisis in Europe last year, the group concludes.

New ADI commissioner Quaranta has long experience with Ilva group, as the company was known prior to ArcelorMittal’s takeover. Since 2022, he has also headed the consortium of Italian steelmakers created to study and develop new opportunities related to the production and supply of direct reduced iron. Local trade unions have welcomed his appointment as ADI commissioner.