ArcelorMittal is saying goodbye to its plans for the sprawling steel plant in Taranto, southern Italy

Rome (AFP) - ArcelorMittal, the world’s biggest steelmaker, said Monday it is pulling out of a deal to buy struggling Italian firm Ilva after Rome decided not to grant it immunity from prosecution over a heavily polluting plant that was a central part of the acquisition.

The Taranto plant in the south of Italy is mired in controversy because experts believe that some 7,500 people have died in the surrounding area as a result of diseases linked to toxic emissions.

ArcelorMittal began leasing the plant – with an obligation to buy it – last November, and had plans to invest 2.4 billion euros ($2.7 billion) to revive it, including 1.2 billion euros to curb pollution by 2024.

The steel giant was given a period of legal immunity to bring the site up to environmental standards.

But after much prevarication, the Italian parliament revoked that decision and the company lost its immunity on November 3.

As a result, ArcelorMittal said it would pull out of the purchase altogether, arguing it had a contractual right to do so as its ability to operate had been “materially impaired”.

ArcelorMittal’s decision came under heavy fire all across Italy, with trade unions variously blaming the steel giant and the ruling anti-establishment Five Star Movement (M5S), which is a foe of big industry, for pulling the rug out from under a deal that would have safeguarded thousands of jobs.

- ‘Disaster’ -

“We’re facing a real industrial, social and environmental disaster,” said trade union CISL head Annamaria Furlan.

While environmentalists and families of cancer victims have long called for the Taranto plant to be shut, many locals had placed their hopes in ArcelorMittal turning it around

“We call on the government to intervene and the company to row back its decision,” she said on Twitter.

ArcelorMittal explained that the local criminal court had ordered work that would have been impossible to complete on time, making the closure of a blast furnace inevitable.

“The shutdown would make it impossible for the company to implement its industrial plan, operate the Taranto plant and, generally, perform the agreement,” said ArcelorMittal.

Industry Minister Stefano Patuanelli called a crisis meeting with fellow ministers in Rome, with sources saying the government “will not allow Ilva to close”.

Prime Minister Giuseppe Conte has summoned ArcelorMittal executives to a meeting in Rome on Tuesday afternoon.

The company had previously warned that removing immunity would force it to throw in the towel, despite having already begun implementing its clean-up plan.

The Taranto plant – Europe’s largest integrated steelmaking site – has a workforce of more than 8,000 in the poverty-hit southern Italian city, where unemployment is high.

- Political fallout -

While environmentalists and families of cancer victims have long called for the sprawling plant to be shut, many locals had placed their hopes in ArcelorMittal turning it around.

Prime Minister Giuseppe Conte has summoned ArcelorMittal executives to a meeting in Rome

In June, it temporarily laid-off 1,400 workers owing to sluggish market conditions as steel tariffs dampened demand across Europe.

ArcelorMittal’s withdrawal could also have political consequences for Italy’s ruling coalition of the M5S and centre-left Democratic Party.

Italian firebrand Matteo Salvini, head of the popular far-right League, seized the opportunity to rail against the M5S in particular, which has long campaigned for closure of the steel plant and its transformation into a clean energy park.

The former interior minister slammed it as a “disaster” and called for heads to roll in the corridors of power.

Others, such as left-wing Free and Equal member of parliament Luca Pastorino, accused the company of using the immunity as “a pretext” for quitting because of the crisis in the steel industry.