The French government is grappling with the fallout from controversial comments made by French Industry Minister Arnaud Montebourg, who launched a stinging attack on the Luxembourg-based ArcelorMittal, and threatened to nationalise one of its French facilities. Lakshmi N. Mittal, ArcelorMittal’s Chairman and CEO, was set to meet French President Francois Hollande in Paris, after Montebourg’s comments to Les Echos , France’s largest economic daily, in which he also suggested that Mittal was no longer welcome in the country.

The developments come ahead of a deadline on Saturday for the French government to find a buyer for two idle blast furnaces at ArcelorMittal’s Florange plant in eastern France, near the border with Luxembourg.

Unless a buyer is found by that time, ArcelorMittal plans to close the two blast furnaces at Florange that were idled last October, as European steel demand shows no sign of improvement, with the loss of 629 jobs. It plans to keep the remainder of the site, which employs a further 2,000 people, turning it into a hub for high value added products catering to the automotive industry. ArcelorMittal employs around 20,000 people in France.

ArcelorMittal isn’t the only firm to come under fire from the socialist government of Hollande, which has made protecting jobs a priority. Over the summer, Montebourg strongly criticised Peugeot Citroen for its plans to cut 8,000 jobs.

While Montebourg subsequently toned down his comments about ArcelorMittal, his aggressive stance has triggered warnings in France that it would do little for the image of a country already under fire over its attitudes towards international business. “Montebourg is giving an image of France around the world which really isn’t good,” the CEO of a major French company told the Financial Times .

Recast programme

A person close to the Mittal family expressed “shock” about the comments, adding that the company had fully lived up to the commitments it had made.

Florange had been slated for closure by the previous owners, as part of their “Apollo” restructuring programme. It is understood hat ArcelorMittal had made clear its intentions to continue with that programme but, following an uptick in steel demand (before the 2007 crisis hit), had kept the plant open.

After a brief recovery following the 2007 financial crisis, steel demand in Western Europe has slumped again, and is expected to fall around 8.5 per cent for the year 2012, according to consultancy CRU, which expects little improvement before the second quarter of 2013.

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