“Production will stop if Snam is not paid”. This was stated by the president of Acciaierie d'Italia (formerly Ilva), Franco Bernabe in a hearing in the industry commission in the Senate on decree law 2 of 2023, the so-called Ilva decree (yet another), which without half measures explained that the former Ilva has arrears with Snam that must be paid. Hence the extreme conclusion: otherwise the "supplies will be interrupted" and the activity of Taranto will be "irreparably compromised".
On Monday 30 January, the Ministry of Economy and Finance announced that it had prepared the disbursement of the financial endowment equal to 680 million euro for Invitalia so that it can transfer the sum "without delay" to Acciaierie d'Italia, the company in the hands of ArcelorMittal in which the State, through its subsidiary Invitalia, has a minority shareholding of 38%. But the list of creditors of Acciaierie is quite long.
As regards the debt position towards Snam, Bernabè added that it is "an unsustainable burden which has generated payment arrears towards the supplier Eni which has decided to terminate the supply contract and Snam which has intervened of the rules that provide for the supply of gas by default”.
Bernabè: "Never experienced such a complex situation"
“The situation of Acciaierie d'Italia is absolutely more complex than any I have experienced before – continued Bernabè -. For a company that has a turnover of 3,5 billion, an increase in costs of around 1 billion is absolutely unsustainable. And it must be acknowledged to the managing director Lucia Morselli to have led the company in a very dramatic situation. I have had dramatic experiences with tens of thousands of jobs at risk, but the situation of Acciaierie d'Italia is absolutely more complex than any I have experienced before". The manager recalled the restructuring of the chemical sector when he was the CEO of Eni. “That was a success, but we had a strong shareholder who could borrow on the market. Acciaierie d'Italia had to manage everything with cash flow”.
The cost of salty gas for the former Ilva
At the base of everything is the dear energy. "The steel market - explained Bernabè - was marked by two extraordinary events, the pandemic and the Russian-Ukrainian conflict: this caused a shock effect: the price of gas increased by more than 6 times the average level up to a peak of 350 euros per megawatt in August 2022. As a result of the price increases, the cost of energy for the company has gone from around 200 million in a normal year like 2020 or 2019 to one billion and 550 million in financial terms. Increases which were partially offset by the tax credit mechanism which brought about the effective burden to one billion and 100 million: it is clearly a unsustainable burden which has generated arrears of payments to many suppliers, especially energy”.
The financial crisis and the effects on related industries
But what are the sufferings of related industries? A heavy financial crisis that the president of Acciaierie also explained with the exit of the company from the perimeter of the multinational ArcelorMittal. "The latter - he underlined - actually provided the financing of the working capital" and Adi "who depended on ArcelorMittal for the financing of the working capital, suddenly found itself without the possibility of financing it. In the case of AdI, which has a processing cycle of at least six months, there is a need for a bank structure of at least 1,5 billion. The company cannot be banked, has no access to credit, except to a very limited extent, and does not have a shareholder who can financially support it with the exit of ArcelorMittal because the State cannot intervene except under very specific conditions and legislation for the financial support of the company. But it certainly cannot finance working capital”. Therefore, Bernabè explained again to the Senate, AdI "found itself without the possibility of accessing bank credit" and had to "manage the entire production and commercial process for cash, using the cash generated by the sale to finance above all the purchase of raw material” which “must be paid when the ship is loaded. The cash that the company generates, the one immediately available, must be used for the purchase of raw materials without which the production cycle is interrupted”.
Decarbonization in 10 years
As regards the decarbonization plan, the president went into more detail: the first phase of the plan will have a time range from 2023 to 2025 and envisages a investment of over one billion “destined to increase due to inflation” explained Bernabè. The second phase will take place over a period of time between 2024 and 2027 and involves an investment of 2,4 billion. The third will be built between 2027 and 2029 and involves an investment of 1,2 billion. The fourth phase will be built from 2029 to 2032 and involves an investment of 1 billion.
“The ultimate goal – continued Bernabè – is to supply the plants with only green hydrogen”. The plan will have to achieve four objectives: respect for the environment, continuity of employment, economic sustainability and growth in market shares. “It is a complex and ambitious industrial plan that requires a long preparatory work, all of which requires time and significant financial resources” concluded Bernabè.
