Poland Plans ArcelorMittal Talks on Future of Steel Industry

ljpx(3114gz8u)0zi02kbh3m_media_dl_1.png JSW

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(Bloomberg) — Poland seeks to discuss ArcelorMittal SA‘s plans for operations in Europe amid growing concerns over the country’s ailing steel industry.

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Local steel-making lies at the heart of Poland’s agenda to bolster its defense industry and revamp its energy sector. ArcelorMittal is the biggest producer of the metal in the east European country, responsible for half of the country’s capacity. 

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State Assets Minister Wojciech Balczun said on Tuesday that he will meet ArcelorMittal representatives in the near future as the government seeks to ensure that local operations continue. The move comes as the cabinet faces growing pressure from unions to intervene in the industry, threatened by cheaper imports and high European Union emission costs.  

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“I would certainly want to see as much steel as possible coming from Poland,” Balczun told the RDC Radio. “All the new investments we plan, including in defense, offshore and onshore wind and a nuclear power plant mean the needs are gigantic.”

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Uncertain Future

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Poland has recently revived Huta Czestochowa SA, one of its biggest steelworks that is betting on more orders from the wind-power and defense industries. The government may expand the country’s production capacity, depending on what ArcelorMittal plans to do with its assets, according to Balczun.

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The minister said it’s not clear what will happen with ArcelorMittal operations and declined to indicate if Poland was interested in buying any assets. “One thing is sure, ArcelorMittal has been consistent in executing its strategy of withdrawing from Europe,” he said. 

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ArcelorMittal, which is also the biggest steel producer in the European Union, didn’t immediately respond to a request for comment from Bloomberg News. 

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ArcelorMittal has limited production at one of its steelworks in Poland in July, saying then that EU producers contend with high energy prices, carbon dioxide costs and insufficient protection against cheap imports. The bloc’s recent announcement of steel tariffs and limits on imports were welcomed by the company, according to a statement on website.

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Coal Miner

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The results of the talks will also be critical for its largest metallurgical coal producer JSW SA. The Warsaw-listed miner has been hemorrhaging cash for more than a year amid struggles to cover a burgeoning wage bill during a period of lower coking coal prices.

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The state-run company has used up much of its rainy-day fund, forcing it to issue a warning last month that it may run out of cash by March without external help. More than 3,000 people, or 10% of its workforce, may leave under the state program for miners, the country’s cabinet said on Tuesday, lifting JSW shares to a seven-month high. 

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Balczun said this week that Poland’s ability to produce coking coal locally and make its own steel are crucial for the country’s security. Still, JSW’s path to recovery may prove bumpy. 

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Job cuts and salary reductions risk putting its management board and the government of Prime Minister Donald Tusk on a collision course with its powerful trade unions. The miners have announced plans to protest in Warsaw on Nov. 4, to drum up support for their industry.

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