Obscured by the confrontation that is not always civil or appropriate on green passes and vaccines, we risk losing sight of dynamics and phenomena that are much more important for the future of the country. Some have to worry us like the rise in energy and bills, the children of the scarcity of raw materials and an ecological transition that someone had passed off as being free of charge. Others must give us hope because they presume the existence of an industrial project that has been left to itself for too long.
This is the case of steel which, after years of failures and defeats, seems to have returned to being central and a priority in the industrial development of a country that will have 220 billion to invest over the next five years.
Thyssen-Krupp lascia
On Thursday the news came that the Italian group Arvedi has bought Ast (Acciai Speciali Terni), the industrial complex owned by the German giant Thyssen-Krupp. Both the Terni plants and the related commercial organization in Germany, Italy and Turkey.
Good news for Umbrian workers, for Italian steel in general and more generally for the ecological transition, given that Arvedi is a leader in the production of green steel. This is the first important piece of a scenario that could take place in less than a year and that should bring steel production back to Italy and under the Made in Italy umbrella, putting an end to the season of foreign multinationals. In fact, the three historical capitals of the steel industry – Taranto, Terni and Piombino – will change hands: in May 2022, according to the agreements, Acciaierie d ‘Italia (the former Ilva) will be under the control of Invitalia (the State); the Terni plant passes to Arvedi; in Piombino, where the Jindal relaunch never took off and a possible public intervention is being studied with Invitalia, a large group of Italian steel companies (from Arvedi to the Venetian steelmakers) presented a joint project to the government, an alternative to the Indian multinational.
Giorgetti’s plan
All pieces of that reorganization of the national steel industry that Minister Giancarlo Giorgetti had indicated among the first objectives of his mandate. In short, while Salvini puts a spoke in the wheel on the green pass, Giorgetti works to give Italy back not only a strategic production in view of the PNRR, where steel production will be central and also essential between roads, bridges and railways. They are the two faces of the League.
If the future of Taranto is already written – Invitalia will rise to 60% and the French-Indian ArcelorMittal will drop to 40% -), in Piombino everything is evolving while in Terni a new season has already begun.
Seller and buyer have decided not to disclose the economic terms of the transaction. But it is credible that the value is around 700 million euros. Ast is a healthy company, with 2,700 employees and a turnover in the order of 1.7 billion a year. More or less the size of Arvedi. The Cremonese company founded in 1963 by Giovanni Arvedi, who is still its president, with this acquisition will be able to establish itself among the major European steel groups: the Terni plant joins the other six production units, two to Cremona, one in Trieste, Ilta Inox in Robecco d ‘Oglio (also in the province of Cremona), Arinox in Sestri Levante (Genoa) and Metalfer in Roé Volciano (Brescia). The Umbrian plant also has a respectable pedigree: it was the main Italian steel industry for decades.
Why Arvedi won
The acquisition of the majority stake in Thyssenkrupp Acciai Speciali di Terni by Finarvedi is certainly a brilliant financial operation but above all it writes a new page in the history of the Cremonese and national economy. If it were football, we would speak of a sensational market hit. It is certainly a turning point in the balance of one of the key sectors of industrial production: the steel industry.
Among the winning cards that allowed the Cremonese group to overthrow first the Chinese group, then the Korean one and finally the cousins of the Mantua house (the Marcegaglia group), there were credibility, relationships matured in half a century of activity and entrepreneurial vision. Do not underestimate the pressure of the government that has always cheered for the Italian solution. And the know-how, that set of skills and technologies that the Arvedi Group has matured not only in terms of the quality of the processed product but also of environmental sustainability. When it comes to green steel, in Italy, the finger ends on Arvedi.
Cremona capital of the steel industry
If nothing gets in the way, Cremona will become the absolute capital of the steel industry. Here it is worth underlining the fact that Arvedi is not a steel transformer but a producer: in its factories it produces steel from the raw material unlike the main competitors who buy steel on international markets and transform it into finished products. Having then, as a manufacturer, complete control of the supply chain, costs are lower, energy savings and a lower CO2 impact are ensured. The group remained loyal to its Cremona electric ovens and developed early green technologies.
The operation was blessed and welcomed also by the unions who rightly allow us to follow the development of the negotiations step by step and put their hands ahead with respect to the production segments and employment levels. Minister Giorgetti has followed the negotiations step by step when he is minister. And he counts a lot on this dossier to give a turning point to the action of his ministry. «This condusion – he explained – represents an important step for the enhancement and relaunch of Italian steel. We welcome that the ownership passes to an Italian group and we hope that this will also translate into a development of the industrial area and a protection for the territory concerned ».
The national steel plan is urgent
Now it is really urgent to equip the country system with the national steel plan. Thirty years ago Ilva was one of the five largest steel groups in the world, today it is over the hundredth place. For nine years, the seven successive governments have remained systematically paralyzed between the promises of astonishing relaunches and reality.
The reality is a complex system: making steel without poisoning the environment is difficult and costs, that is, it makes it less competitive. The road to electric ovens is clean but also expensive, as the industry is now seeing that the kilowatt hour has quadrupled the price in a few months. With gas, things are not very different.
And it is still difficult to compete with 4-5 million tons of production, which Ilva would reach if all went well, against groups like ArcelorMittal that travel on the edge of 100 million tons. And after all, if the Anglo-French group has bought Ilva and is now returning it to the state (after having made it easy for a few years), someone will need to ask some questions. For example, how do you compete with Chinese or Brazilian prices today that transporting steel back and forth around the world is very cheap? These are the questions that Minister Giorgetti must try to answer.
What happens in Taranto
Certainly, we have seen, Italy wants to maintain steel production. By May 2022 the bulk of the steel production, although quite dented, will be back in Italian hands: first Taranto, then Piombino and finally Terni, with the announcement on Thursday. And these are the cornerstones of that National Plan for the steel industry that the Draghi government is working on in great secrecy. What we do know is that the state is putting more than a billion euros on the plate to return to the steel market. The goal has already been written: to bring Taranto to produce eight million tons of steel from today’s 3.5 by 2025, one third with electric furnaces.
Most of the resources for the conversion of the former Ilva should come from European funds within the Just Transition Fund, amounting to just under a billion. “The production with methane and fusion in an electric furnace generates about 30% of CO2 emissions compared to the integral cycle, and the subsequent development with green hydrogen increases the abatement of emissions to about 90%”, wrote the Draghi government in the Pnrr. .
And what in Piombino
However, Invitalia has also decided to take root in the other great center of Italian steel, the former Lucchini di Piombino. Here the Indians of Jindal arrived in 2018, taking over the Aferpi site from the Algerian group Cevital for about 100 million, committing themselves to relaunch steel production and to build two electric furnaces for a production of at least two million tons. Like the Algerian ones, Indian projects too have faded over time, amidst the many promises of a return to high production rates and the gradual transition to electricity. The owners promised a plan but constantly postponed it until last January (and it was considered not very credible by the Government and the Region), despite the growing pressure of trade unions and local institutions. The turning point came in 2020 when the former Conte government opened to state intervention in the Tuscan steel industry. These days, the Draghi executive is continuing on that path, with the intention of taking over 49% of the property. Today the steel mill employs about two thousand employees, many of whom are layoffs.
Taranto, Piombino and Terni are perfect examples of how strategic it is for a country to govern its steel supply chain. And, however dented, the steel is returning to Italian hands. Partly public but mostly private.
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