JSW Says Lucchini Sale is Not a Done Deal

New Delhi/London: Italy's claims that a sale of parts of insolvent Italian steelmaker Lucchini to India's JSW Steel will be concluded within days are premature, a top JSW executive said on Wednesday.

Lucchini, formerly owned by Russia's Severstal, was declared insolvent in 2012 and placed under special administration after falling victim to plunging European demand for steel during the 2008 recession.

Italian Prime Minister Matteo Renzi on Sunday said a deal between Lucchini and JSW Steel, controlled by billionaire Sajjan Jindal, would be concluded in "a matter of days".

However, JSW joint managing director Seshagiri Rao said the company has yet to finalise any deal, with union and industry sources saying that opposition from a leading Italian labour union to any piecemeal sale of Lucchini could delay a deal further.

"We are one of the bidders, yes. But all I can say at the moment is that we have not concluded anything," Mr Rao said in Mumbai, declining to give further details but adding that he had no plans for to travel to Italy for further talks.

JSW was left as the only Indian bidder when Jindal Steel and Power, controlled by Sajjan's brother Naveen, pulled out after showing initial interest, Jindal Steel CEO Ravi Uppal told Reuters.

A spokesman for Lucchini declined to comment.

Steelmaking future at risk

Lucchini, with most assets in the port city of Piombino, on the Tuscany coast, owns a blast furnace, a steel mill, a coke plant, three re-rolling mills and facilities at the port.

It can produce about 2.5 million tonnes of steel a year.

Yet its steelmaking future is at risk because Jindal's plan is for Lucchini to process steel made elsewhere, three industry and union sources said.

The first source close to JSW, who declined to be named as he is not authorised to talk to media, said that the company has made a binding bid for two processing facilities only - the wire rod mill and a rail mill - and that the "bid amount is not big".

Two industry sources in Italy said that the bid also included Lucchini's third rolling mill, the bar mill, and the port facilities.

The offers have created friction with Italian labour union FIOM because these assets employee less than half of Lucchini's 2,000 workers.

"On the one hand the prime minister says it's a matter of days and on the other hand there are reports of unions being unhappy," the source close to JSW said.

FIOM said that JSW's offer will not be welcome unless it commits to keeping Lucchini's steelmaking operations.

"Piombino has to be reborn as a new steel mill. If Jindal thinks he can come here and only take the rolling mills and port facilities and transform us into a service centre, he faces strong opposition," FIOM's Piombino representative Mirko Lami said.

Copyright @ Thomson Reuters 2014