The world's top steelmaker ArcelorMittal welcomed on Saturday a deal over the future of one of its plants that the French government had threatened to nationalise.
The dispute over closing blast furnaces at the Florange plant had risked damaging France's image among investors, with a virulent attack by a minister on the company owned by Indian-born steel tycoon Lakshmi Mittal.
"It is positive that we reached an agreement on the future of our activities at Florange," said ArcelorMittal executive Henri Blaffart.
"In the context of the current economic environment, it's a good agreement."
French Prime Minister Jean-Marc Ayrault announced late Friday a deal under which ArcelorMittal had committed to invest at least 180 million euros ($234 million) over the next five years at the Florange site in northeastern France.
The government and the steelmaker had waged high-stake brinkmanship for weeks over the fate of two blast furnaces that ArcelorMittal wanted to shut for good given a slump in demand for low-end steel products.
ArcelorMittal had given the French government until December 1 to find a buyer for the blast furnaces or said it would begin laying off around 630 employees.
The French government had threatened to nationalise the entire site, which contains facilities to produce higher-end products that ArcelorMittal wanted to keep, as Paris said it couldn't find a buyer for just the furnaces.
Ayrault said under the deal the two blast furnaces ArcelorMittal had closed would be left intact until EU financing was confirmed for an existing carbon-capture project and that ArcelorMittal agreed not to proceed with forced job cuts.
ArcelorMittal made no comment about the carbon-capture project in its statement on Saturday.
It confirmed the 180 million euros in investment would be made in higher-end steel production, not the blast furnaces.
ArcelorMittal had made it clear that any nationalisation of the plant would cast doubt on the future of all its operations in France, where it employs 20,000 people.
But unions at the plant were unhappy, and wanted to know what had happened to the prospective buyer government had mentioned.
"We have the feeling we have once again been betrayed," said Edouard Martin, a spokesman for the CFDT union at the Florange plant. "We don't trust Mittal at all," he added.
The deal raised concerns about the position of Industrial Renewal Minister Arnaud Montebourg, who accused the company of blackmailing the country.
He also said it was "no longer welcome in France", he added, sparking outrage in business circles.
Montebourg had also announced there was an investor ready to invest 400 million euros in Florange, and just hours before the deal told workers that the government was ready to nationalise the site.
However a source at the prime minister's office said Friday there were no "credible, firm" takers for the site.
An arch-antiglobalist, Montebourg is widely regarded as a loose cannon inside the government, and his statements chilled the business climate and caused outrage in Mittal's native India.
The dispute over the plant had put Hollande's government in a bind, caught between a pledge to protect jobs and to improve the competitiveness of French industry as the country faces rising unemployment and stagnant growth.
There had been concerns that a nationalisation would have set a precedent and unleash a wave of similar demands from unions at other ailing companies.
Despite being under severe budget constraints in order to meet its EU commitments to cut public deficit, the French government has recently helped prop up automaker Peugeot's financing arm and will have to pump billions into Dexia bank.
The dispute also came at a difficult time for Arcelor Mittal, which plunged into a quarterly net loss of $709 million in the period from July to September on sliding demand from China.
The company is saddled with debt that is expected to rise to $22 billion by the end of the year, with Moody's recently downgrading ArcelorMittal's credit rating to junk status.