ArcelorMittal confirms closure; says employees will get all payments they're entitled to

Thursday, March 10, 2016 - 20:00

ArcelorMittal is confirming its decision to close operations in Point Lisas.

The following the is a statement from the company:

"ArcelorMittal Point Lisas announces with deep regret that it is to close its operations.

Despite the company’s considerable efforts to avoid the closure of the iron and steel facility, a combination of local and international challenges has resulted in a decision to close the business, which has been under severe financial distress since the second half of 2015.

Locally, proposed major increases in the price of gas and electricity at a time of falling commodity prices have rendered production costs uncompetitive. Additionally, proposed increases to port rental fees, announced property taxes and business levies have further contributed to the unsustainability of the business.

As an export-led business, ArcelorMittal Point Lisas has also been severely impacted by the drop in international steel prices and global overcapacity in steel production.

Imports into Central America and the Caribbean – ArcelorMittal Point Lisas’ core markets for its steel products – from outside the region, principally China and Turkey, rose by almost a quarter (23%) in 2015, compared with 2014.

As a result of these factors, steel orders were extremely weak in 2015 and the company’s financial position deteriorated significantly, with net losses of US$281m compared with US$44m in 2014.

Furthermore, the company has been recording net losses since 2009.

The plant has been idled since 23 November 2015, when 480 workers were temporarily laid off as the company worked to find an alternative solution to closing the plant. This lay-off announcement was renewed on 3 February 2016, when 498 workers were laid off until 13 March 2016.

In recognition of the importance of the company to the economy of Trinidad & Tobago, and to the plant’s 644 employees and many suppliers, ArcelorMittal Point Lisas had been in discussions with the Government and other stakeholders to find another solution for the company including a potential sale, or a transfer to the Government, but unfortunately these discussions have not had a successful outcome.

As a last resort, ArcelorMittal Point Lisas has therefore recommended a creditors’ voluntary wind-up is undertaken as soon as is legally and operationally practical.

ArcelorMittal Point Lisas’ employees will receive all the payments they are legally entitled to.

Furthermore, in recognition of the impact the decision will have on those employees, the ArcelorMittal Group is considering whether workers could benefit from the liquidation proceeds that the Group is entitled to as a creditor.

Commenting, Jefferson de Paula, a member of the ArcelorMittal Point Lisas’ board of directors, said: “Today is a very difficult day for ArcelorMittal Point Lisas, all its employees and the community in which we operate. Despite working extremely hard over recent months to find a way to keep the iron and steel plant open – including a proposal to transfer ownership to the Government of Trinidad & Tobago - maintain employment and return it to profitability, we have unfortunately not been able to reach a solution.

The business has been battling record proposed rises in gas and electricity prices in Trinidad & Tobago, as well as a steep drop in international steel prices and significant global overcapacity in steel production. This has resulted in the company recording unsustainable losses in 2015, and ArcelorMittal Point Lisas has therefore regrettably taken the decision to liquidate.

I know this is very bad news for all ArcelorMittal Point Lisas’ employees and their families and we recognise that they will be looking to us for support. As a responsible employer, ArcelorMittal Point Lisas will pay all amounts to employees that they are legally entitled to receive. Furthermore, we are looking into the possibility of whether workers could benefit from the liquidation proceeds that the ArcelorMittal Group is entitled to as a creditor.

This is not a decision that we have reached easily and we are aware of the impact of this news on the local community. However, ArcelorMittal Point Lisas has been left with no alternative and I hope that, following the meetings held with the Union today, employees feel fully informed about the reasons behind the decision.”