Czech government concerned about future of Ostrava steelmaker

The biggest Czech steelmaker and its home city of Ostrava are concerned they could be hit by a major ownership upheaval in the European steelmaking sector. And the Czech government is keeping close tabs on talks surrounding the fate of ArcelorMittal Ostrava.

ArcelorMittal Ostrava, photo: František Tichý

More than 1,600 kilometres separate the southern Italian port city of Taranto and the gritty eastern Moravian-Silesian city of Ostrava. But the fate of the two are now closely bound with global steel multinational ArcelorMittal seeking to acquire the massive Italian steel maker Ilva and its steel plant on the heel of Italy. Part of the price of European Commission clearance for the deal looks like being the sell up of other steel making capacity across the continent, including the Ostrava plant.

And that’s the source of major worries for Ostrava and for the Czech government. Brussels is worried that ArcelorMittal might simply control too much of European steel production, especially the flat products used to make everything from cars to the steel used in the construction sector. And although the sell ups likely to be demanded of ArcelorMittal are aimed at boosting competition, ownership changes are always risky and the Czech government is particularly worried that a speculative investor which might control of the Ostrava steelmaker and not have its long term interests at heart.

That’s one reason why the general manager of ArcelorMittal Ostrava, Ashok Patil, met with Czech minister for industry and trade, Tomáš Hüner, and gave what assurances he could about the situation:

ʺWe assured the minister that even in the case of a divestment scenario, Ostrava steelworks would continue to operate in full. There is no threat of a reduction of capacity and related jobs. We agreed with the minister that we will be in close touch and work on the subsequent steps as we work more on that decision. Of course, subsequent steps would be supervised and be under the guidance of the European Commission, but we will be in close touch with the minister to discuss the steps and have a constant dialogue.ʺ

Ashok Patil, Tomáš Hüner, photo: CTK

Mr. Patil later elaborated that one of Brussel’s targets should be to see a thriving Ostrava steelworks in whoever’s hands it might end up:

ʺWhen the Commission is reviewing the process of the remedy, they want to see more competition on the European market which covers the investments and the divestments. The units in the divestment need to be able to run fully and stand alone in the European market and compete.ʺ

The Ostrava steelworks and its subsidiaries employ around 7,250, paying above average wages, in a city and region still suffering from a higher than average jobless rate. And the fate of other key local employers, such as coking coal producer OKD, are also closely tied to the steel plant.

That’s why industry minister Hüner has created a team of experts to keep in the closes touch with developments affecting the steel plant. The key European Commission analysis of the divestments to make in connection with the Ilva acquisition should be released on May 23.