French minister threatens trade curbs on ArcelorMittal

PARIS (Reuters) - France's industry minister said on Wednesday the European Union could extend tariffs on cut-price steel imports, a riposte to ArcelorMittal (ISPA.AS) after the Indian steelmaker vowed to press ahead with plant closures and job cuts.

The threat from Arnaud Montebourg revives tensions between France's Socialist government and ArcelorMittal over the fate of two blast furnaces in eastern France, weeks after Montebourg was forced to withdraw a proposal to nationalise them.

Ministers from EU governments and the European Commission urged ArcelorMittal on Tuesday to postpone capacity cuts including the closure of its Florange factory in France until June, when they plan to submit an action plan for the region's struggling steel sector, which employs 360,000 people.

The European Commission has just imposed punitive duties on Chinese makers of some types of steel to counter what it said were unfair state subsidies.

"Imposing tariffs on cut-rate steel is the strategic response to companies that don't respect the cradle of steel that is the European Union," said Montebourg, adding that ArcelorMittal was investing in cheap steel production in India and no doubt planned to export it to Europe.

The Luxembourg-based company, formed when India's Mittal bought France's Arcelor in 2006, responded that Montebourg's comment was incorrect because the company did not produce steel in India, much less export it from there.

"ArcelorMittal would like to correct the statement of Mr. Montebourg... We produce steel in Europe for our European customers and will continue to do so," a spokesman said in an email to Reuters.

The company said on Tuesday it could not delay its restructuring due to a dramatic slump in demand for steel in Europe.

Montebourg said he welcomed the pressure brought to bear on the steelmaker by EU states.

"Every day, this private firm hurts countries and their populations; uses public money whenever it sees fit, and has no awareness of its responsibilities," he told French daily Le Monde and Belgium's Le Soir.

Montebourg was accused of sounding anti-business when he said late last year that Mittal was unwelcome in France.

Frequent anti-business outbursts from the minister have caused strains within the government, which has suffered from a string of communications gaffes since it took power last May.

Earlier on Wednesday, Foreign Minister Laurent Fabius strayed from the government's firm line that it will meet its 2013 budget targets, saying it would probably miss its deficit goal.

(Reporting By Yves Clarisse; Writing by Nick Vinocur; Editing by Tom Pfeiffer)

Updated Date: Feb 14, 2013 00:30 AM

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