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French minister says 'no confidence' in steel tycoon Mittal

ArcelorMittal blast furnaces are pictured in eastern France in November 2012. A French minister cast doubt Sunday on whether the company would keep its end of the bargain after a compromise deal on the plant, which Paris had threatened to nationalise.

A French minister cast doubt Sunday on whether the world's top steelmaker ArcelorMittal would keep its end of the bargain after a compromise deal on a key plant that Paris had threatened to nationalise.

The dispute over the closure of blast furnaces at the Florange plant risked damaging France's image among investors, after a virulent attack by a minister on the company owned by Indian-born steel tycoon Lakshmi Mittal.

"There has been an agreement but there is no confidence," French Ecology Minister Delphine Batho told the iTele network.

"Mittal has never kept his promises in the past," she said. "We are absolutely mobilised and the arm-wrestling with Mittal will continue to ensure that the pledges are respected."

Unions also echoed her fears, while Prime Minister Jean-Marc Ayrault defended the compromise deal.

"Our negotiations with Mittal had been bitter and difficult because we refused vague statements and wanted unconditional and specific commitments," Ayrault told the regional daily Le Republicain Lorrain.

The head of the French employers federation Medef, Laurence Parisot, also hailed the accord, saying it was "very clear: there is no job loss".

She added, however, that the doubts regarding Mittal's good faith were "dramatic", as union representatives voiced their concerns.

"The government's decision has created a lot of disappointment and left a bitter taste," said Jean-Claude Mailly, secretary general of Force Ouvriere, one of France's top three unions.

Mailly told the weekly Journal du Dimanche that he was "very sceptical" about Mittal's promises.

"He had (earlier) promised 320 million for Florange but we never saw the cash," he said.

"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."

The unions are due to meet Ayrault on Wednesday.

Ayrault announced a deal Friday in which he said ArcelorMittal had committed to invest at least 180 million euros ($234 million) over five years at the Florange site in northeastern France.

The government and the steelmaker had been waging high-stakes brinkmanship for weeks over the fate of two blast furnaces at the plant.

ArcelorMittal wanted to shut them for good because of a slump in demand for low-end steel products.

It had given the government until December 1 to find a buyer for the blast furnaces after which it would begin laying off around 630 employees.

The government responded by threatening to nationalise the entire site, which contains facilities to produce higher-end products that ArcelorMittal wanted to keep. Paris said it could not find a buyer for just the furnaces.

Under Friday's deal, the two blast furnaces ArcelorMittal had closed would be left intact until EU financing was confirmed for an existing carbon-capture project, while ArcelorMittal agreed not to proceed with forced job cuts.

A decision on funding the project will be taken on December 20, a week after it is examined by the member states, a top European source told AFP in Brussels.

The dispute had left President Francois Hollande's government caught between a pledge to protect jobs and the need to improve industrial competitiveness in the face of rising unemployment and stagnant growth.

It also came at a difficult time for ArcelorMittal. The company is saddled with a debt mountain that is expected to rise to $22 billion by the end of the year, with Moody's recently downgrading its credit rating to junk status.