Minister says Mittal not welcome in France

A showdown between global steel giant ArcelorMittal and France over its Florange plant hit new heights on Monday as a minister threatened to nationalise the site and said the company was no longer welcome in the country.

The fate of the site, in the traditional heartland of France's steel industry in the eastern Lorraine region, has become a litmus test of Socialist President Francois Hollande's strategy to rescue France's struggling economy.

Members of the Mittal family which owns the multinational told the daily Le Monde they were "extremely shocked" by Industrial Renewal Minister Arnaud Montebourg's remarks, which are emblematic of what critics say is an aggressive tone against the business community.

Underlining the seriousness of the dispute, a source close to the matter said company chief Lakshmi Mittal was to meet President Francois Hollande on Tuesday.

France has until Saturday to find a buyer for two loss-making blast furnaces at the site in the northeast of the country and says it has two offers, but only for the entire site.

Indian-born Mittal has refused to sell the full operation and warned that plans for a possible nationalisation of the site would threaten all of its activities in France, where it employs 20,000 people.

Montebourg upped the stakes on Monday, saying France did not want ArcelorMittal in the country anymore and is looking for a partner to take over the group's operations at the plant.

"We do not want Mittal in France any longer because they do not respect France," Montebourg told the French financial daily Les Echos.

"Mittal's lies since 2006 are damning," the minister said.

Shares in ArcelorMittal fell 1.54% to 11.53 euros on the Paris stock exchange.

Montebourg later tempered his comments, saying he meant he did not want Mittal's methods in France, accusing it of "non-respect of its commitments, blackmail and threats."

Speaking to AFP while visiting a factory near Orleans, Montebourg confirmed a nationalisation was possible.

"A temporary public takeover is a perfectly reasonable option... because it costs nothing to the taxpayer and respects both French and European law," he said.

Montebourg told Les Echos he was working on a "transitory nationalisation" project for the site.

The newspaper said that "the idea would be to associate an industrial operator with a minority capital stake for as long as it takes to stabilise activity" at the plant.

Union representatives backed the idea of a nationalisation, though some worried the government would not have the courage to go through with it.

The FO labour federation said a temporary state takeover of the entire site "is the only solution to ensure this strategic activity for France and that this source of employment continue to live and thrive."

"We sense there is a real will to act on the government's part... but will they dare go all the way?" a representative of the CFDT union at the site, Frederic Weber, told AFP.

ArcelorMittal has said the furnaces, which were shuttered for 14 months prior to their closure, were uncompetitive in a tough trading climate, partly because they are too far from ports for transportation.

ArcelorMittal last month reported it had plunged into a third quarter net loss of $709 million (547 million euros) due to a slump in Chinese demand and operating losses in Europe.

The group owns 11 blast furnaces in northern France, Germany and Belgium and, as well as the two at Florange, has shut down two furnaces in the Belgian city of Liege and one in the French port town of Dunkirk.