By Giancarlo Navach and Giuseppe Fonte
MILAN (Reuters) - Italian Prime Minister Giuseppe Conte said on Tuesday he would not allow ArcelorMittal <MT.AS> to pull out of its acquisition of troubled steel plant Ilva, as the threat of huge job losses piled pressure on the government.
ArcelorMittal, the world's biggest steelmaker, announced on Monday it was scrapping a deal to buy Ilva's site in the southern city of Taranto after Rome reneged on a pledge to grant immunity from prosecution over environmental damage in the area.
The government says the Amsterdam-listed steel group has no basis to withdraw from a contract it finalised last year and has accused the company of using the immunity issue as a pretext to walk away from Ilva because it is running up heavy losses there.
"A contract was agreed and we won't bend on this. We expect that commitments be respected," Conte told reporters in Milan.
Industry Minister Stefano Patuanelli accused ArcelorMittal of trying to blackmail the country, but suggested the government might be ready to issue a decree that spelt out existing legal protections that are already provided by Italy's constitution.
"We can consider a norm which explains this principle that is already enshrined in our legal system... without making up any specially tailored rules for ArcelorMittal," he said.
The euro zone's third-largest economy has been broadly stagnant for the last seven quarters, and Ilva's problems have added to worries about Italy's eroding industrial base.
The ruling coalition between the centre-left Democratic Party (PD) and the anti-establishment 5-Star Movement has come under heavy pressure following ArcelorMittal's decision to scrap the Ilva contract.
Opposition parties have accused the government of driving away foreign investors and undermining an area with some of the highest levels of unemployment in the country.
In addition to around 8,000 workers in Taranto, thousands more jobs depend indirectly on the plant, one of a shrinking number of large-scale industrial employers left in the south.
On Tuesday, PD chief Nicola Zingaretti said his party would propose measures to ensure that any buyer would not be liable for environmental damage caused under previous management.
"Anyone who pollutes should pay, but a group implementing an environmental plan should not have penal liability for previous actions for which it had no responsibility," he said.
However it was not clear whether that would be enough to save the plant, which has been blamed for hundreds of cancer-related deaths in recent years.
Some 5-Star Movement lawmakers, who led the drive to remove ArcelorMittal's immunity, warned they would not support a u-turn, setting up a possible clash within the coalition.
Former Industry Minister Carlo Calenda, who led the bulk of the negotiations with ArcelorMittal, accused the government of acting irresponsibly.
"They are a bunch of amateurs who have never worked outside politics for a single day. They don't know what a factory is. They don't know what it costs to do things... The right word for them is charlatans," he told Radio 24.
ADVERTISEMENT(Reporting by Giancarlo Navach in Milan and Giuseppe Fonte in Rome; Writing by Crispian Balmer and James Mackenzie; Editing by Jan Harvey)
