Italian steelmaker Acciaierie d’Italia (ADI), a joint venture between state-owned Invitalia and ArcelorMittal, may see its gas supply interrupted due to failure to pay its suppliers.

In Monday’s court order seen by Kallanish, the Tribunale Amministrativo Regionale (TAR) of the region of Lombardy rejected Acciaierie d’Italia’s appeal aiming to ban energy companies from cutting its gas supply. ENI S.p.A. and Snam Rete Gas are the main suppliers to the steelmaker, which owes Snam about €180 million ($197m). Being an asset of strategic interest for the Italian economy, ADI says it will appeal the order to the Council of State.

“During 2023, ADI received supply offers from Eni S.p.A. which, most recently, in October communicated the impossibility of formulating any more offers, noting the failure to comply with the payment plan envisaged by a settlement agreement stipulated between the parties," the TAR Lombardy court order says.

This was predicted last year by president of Acciaierie d’Italia Holding Franco Bernabè during a televised parliamentary hearing (see Kallanish passim). Last year, gas operators asked the steelmaker for a downpayment of about €100m for a commercial procurement contract, knowing ADI may not be able to pay. Banks will not finance the steelmaker because of its financial and legal woes.

Bernabè noted that ADI operates using only its own cashflow, and every time cash is diverted it means less means to pay for raw materials. "In every production cycle, the steelmaker is forced to reduce output. Without access to credit lines, the company will shut down because it is consuming itself,” Barnabé warned. The cost of energy went up from €200-300m to over €1.4 billion last year, he added.

In 2023, ADI registered steel output below 3 million tonnes in 2023, according to preliminary data. This is below the shareholders’ initial objective of 4mt in 2023 and 5mt in 2024. In a recent meeting with authorities, ArcelorMittal stated it refuses to inject any more cash into the joint venture. The Italian government is considering different divorce options to guarantee the business continuity of the steelmaker.