ArcelorMittal has signed a binding agreement with Invitalia, the Italian state-owned company investing in former steelmaker Ilva. The parties have formed a public-private partnership.

The investment agreement will result in a recapitalization of AM InvestCo, ArcelorMittal’s subsidiary which signed the lease and obligation to purchase agreement for Ilva. Invitalia will invest in AM InvestCo in two tranches. The first investment of €400 million ($485) will be made by 31 January 2021 subject to EU antitrust authorization, providing Invitalia with joint control over AM InvestCo. The second tranche of up to €680m is payable on closing of AM InvestCo’s purchase of Ilva, which is subject to the satisfaction of various conditions to be met by May 2022, at which point Invitalia’s shareholding in AM InvestCo would reach 60%.

ArcelorMittal will also invest up to €70m, to retain a 40% shareholding and joint control over the company, AlrcelorMittal reveals in a note sent to Kallanish. The conditions precedent to closing include the amendment of the existing environmental plan to account for changes in the new industrial plan, the lifting of all criminal seizures on the Taranto plant, and the absence of restrictive measures being imposed against AM InvestCo in the context of criminal proceedings where Ilva is a defendant, ArcelorMittal explains.

The updated industrial plan agreed between AM InvestCo and Invitalia involves investment in lower-carbon steelmaking technologies, including the construction of a 2.5 million tonne/year electric arc furnace. The industrial plan, which targets reaching of 8mt of production in 2025, involves a series of public support measures including ongoing government funded employment support. AM InvestCo’s governance would be based on the principle of joint control starting from Invitalia’s first investment, the company concludes.