When India’s Mittal Steel company bought Belgian-based Arcelor in 2006, the idea was that the newly christened ArcelorMittal (NYSE: MT) would tie up the high-quality western European steel business with Mittal’s extensive markets in the U.S., eastern Europe, and Asia. Now it looks like the idea is beginning to unravel.
A report at Reuters today says that ArcelorMittal will forego a $181 million investment to upgrade a Belgian steel plant. The company has already closed two furnaces and a foundry at the plant, which will ultimately cost about 500 jobs according to the Belgian unions. ArcelorMittal had proposed the investment as a way of keeping the plant operating and supporting about 2,000 jobs.
The company said that it had failed to reach an agreement with the unions on job cuts and so has abandoned its planned investment. ArcelorMittal claims that the Belgian plant has posted an operating loss of about $324.5 million over the last four quarters.
ArcelorMittal’s shares are trading down about 2.7% at $16.85 today, in a 52-week range of $13.28 to 23.62.