EC to examine and possibily expand conditions for ArcelorMittal Ostrava sale, PM Babiš says

The European Commission has agreed to review the terms of sale for the Czech Republic’s biggest steelmaker, the ArcelorMittal plant in Ostrava, and Brussels could impose additional conditions before allowing it to trade hands between one Indian-backed owner to another.

ArcelorMittal plant in Ostrava, photo: František Tichý / Czech Radio

ArcelorMittal of India, the world’s largest steelmaker, is looking to sell its Czech unit based in Ostrava by the end of 2018, along with various assets in other countries, in order to win EU antitrust clearance to acquire a troubled Italian peer.

But the plans of prospective new owner Liberty House have not been made clear enough to allay fears for the future of the Ostrava plant, which employs more than 7,200 people in a region with relatively high unemployment, at a time of uncertainty for the industry as a whole.

Czech union leaders claim that Liberty House’s plans for the developing the steelworks are both unsustainable and inconsistent with EU requirements.

Following a meeting on Friday in Brussels with EU Competition Commissioner Margarethe Vestager, Prime Minister Andrej Babiš (ANO) told reporters that the Commission has agreed to review sale conditions – and could impose additional ones – before giving the green light to Liberty House’s purchase.

But Mr Babiš admitted to reporters that he did not know what those conditions might be.

“They did not provide us with any details”.

The Czech metalworkers’ union OS KOVO argue that Liberty House has failed to meet EU criteria in several key requirements, among them that the buyer be independent and unconnected to the vendor and have the money and know-how to ensure the business remains viable.

Labour leader Petr Slanina says Liberty House’s decision to keep existing ArcelorMittal management in place is evidence of the buyer-seller connection.

Some are even calling the sale mere window dressing. MP Ivo Vondrák, governor of the Moravian-Silesian region that is home to the plant and a member of Mr Babiš’s party ANO, says that Liberty House will in essence be a branch of ArcelorMittal for the first three years according to terms of the deal.

Andrej Babiš, photo: ČTK/Jakub Dospiva

For his part, Mr Babiš is focusing on the metalworkers’ concern that Liberty House make good on its promise to keep on all current ArcelorMittal Ostrava workers and boost capacity over the long term. He also shares their view that Liberty House’s plan to invest 150 million euros in the plant over the next five years would not even guarantee the current range of operation.

“We are not very satisfied with the buyer's plan to invest only 30 million euros a year. This is a business that requires serious investment”.

According to Mr Babiš, ArcelorMittal Ostrava needs 750 million euros over the next decade to remain viable. The unions fear Liberty House in fact intends to turn the Ostrava plant into a low-cost steel supplier for the region – then let it collapse.

For his part, Liberty House’s owner, Indian billionaire Sanjeev Gupta, says no company he has taken over has ever cut production or closed down.