Czech gov’t concerned over future of Ostrava steelmaker

The future of the Czech Republic’s biggest steelmaker, Arcelor Mittal Ostrava, is at the centre of government and union worries.

Arcelor Mittal Ostrava, photo: Lukáš Mižoch, CC BY 3.0

The concern is linked to current owner Arcelor Mittal’s attempts to take over Italy’s Ilva steelmaker, who main plant is located at the southern city of Taranto. Arcelor is reported to have offered the Czech plant, employing around 7,000, as part of a package to pave the way for the European Commission to clear the deal. A final decision from Brussels is expected by the end of April.

Minister of Trade and Industry Tomáš Hüner is due to meet with Arcelor bosses on Thursday to talk about the situation.

According to media reports, the Ostrava plant is not the only part of a possible deal over Ilva, Arcelor’s Romanian, Belgian, and Luxembourg assets might also be at stake in a bid to try and calm Commission fears that it could gain too big a share and a competitive dominant position for certain special flat steel products. Such products make up around more than half of the Ostrava plants annual production.

Ostrava and the wider Moravia and Silesia region are still in the painful process of diversifying their employment base after being based for most of the last century on coal, steel, and heavy engineering. And many of these have been or are in trouble.

The coal industry, epitomised by hard coal producer OKD, is still struggling for survival after facing bankruptcy over the last two years. Results this week showed it has a healthy turnover and is making an operating profit but it is still not out of the woods after a considerable slimming down of the workforce.

The engineering sector, centred on the multifaceted Vítkovice Group, is facing many problems partly caused by specific multi-million contracts that turned sour and also by wider sector problems. Many daughter companies have gone into insolvency or been sold off.

And that’s the scenario, that is worrying the Czech government and regional authorities if the future of Arcelor Mittal Ostrava is somehow put into question or if a new owner is found with a slimmed down scenario for the steelmaker’s future. Whether a new purchaser could be found at all is a moot point. Moves in the recent past to find a purchaser for Slovakia’s biggest steelmaker, US Steel Kosice, proved that might not be so easy.