Firms get go-ahead to cut gas to former Ilva steel works in Italy

Milan — An Italian court on Monday cleared the way for companies to cut off gas supplies to steel company Acciaierie d'Italia (ADI), majority owned by multinational steel giant ArcelorMittal.

The administrative court (TAR) of the Lombardy region rejected ADI’s appeal, effectively ending an extension that had been granted by judges in October to the business previously known as Ilva.

Weighed down by an increase in energy prices and a drop in rolled steel coil prices, ADI has run short of cash and has accumulated a huge debt pile with suppliers, particularly energy giant Eni.

Italian gas infrastructure firm Snam Rete Gas had asked for the gas supply to be stopped because ADI accumulated more than €200m in outstanding payments.

Neither ADI nor Snam were immediately available to comment on the ruling. The court's decision can still be appealed before the Council of State, a higher administrative court.

The ruling is a headache for Prime Minister Giorgia Meloni's government, which is trying to avoid the closure of ADI, which would cost thousands of jobs and have serious knock-on effects for the Italian manufacturing sector.

ADI’s main plant in the southern Italian city of Taranto plant is one of the largest in Europe, and is a major employer in Italy's under-developed south.

ArcelorMittal, the world’s second largest steelmaker, owns 62% of the group. State-owned investment agency Invitalia has the remaining 38%.

Italian industry minister Adolfo Urso said on Thursday "drastic action" was needed to relaunch the business after ArcelorMittal rejected a government plan to keep it afloat.

The Meloni government is seeking an agreement with ArcelorMittal that would facilitate the company's exit from ADI without triggering a legal dispute, according to people familiar with the matter.

As a short-term solution the government is considering placing the business under special administration, appointing one or more commissioners to avoid it being shut down.

This would be similar to Chapter 11 bankruptcy in the US, allowing a business or individual to reorganise its debts and obligations. It could also help the government buy time while looking for a new industrial partner for ADI.

About 8,200 people directly work at the company's plant in Taranto, while a further 3,500 are employed in related industries. Production has been reduced in recent months, with some parts shut down and many workers on furlough. 

Reuters