ArcelorMittal blast furnace in Florange-Hayange, France

Idled French steel plant to restart its blast furnace

An idled steel plant which had become a battleground for French presidential elections this year is to restart its blast furnace.

President Nicolas Sarkozy, who trails his Socialist opponent in polls, said ArcelorMittal owner Lakshmi Mittal had pledged to invest 17 million euros into the plant, lifting uncertainty over the future of the last blast furnace in France's former steelmaking heartland.

Industrial decline has emerged as a major electoral issue, putting the plant at Florange near the German border on the front line of France's two-round presidential election in April and May.

Both Sarkozy and his rival Francois Hollande have promised to save the steel mill, and Hollande has said he will pass a law forcing companies to sell unused factories to buyers who would keep them in operation.

"At the request of the French state, ArcelorMittal will invest 17 million euros in Florange," Sarkozy told France Inter radio, adding the steel group would issue a statement later.

Of that investment, 2 million euros will be spent on improving one of the plant's two blast furnaces, and 15 million on modernising the site which employs 2,667 people, 500 of whom could lose their jobs if the furnaces are not restarted.

Of the 15 million euros, 7 million will be spent on installing a new gas holder at the site and 8 million on developing new products for the car industry, Sarkozy said.

French industry has been bleeding jobs since the start of the 2008 financial crisis, helping to push the jobless total up to a 12-year high and undermining consumer spending, the main engine of growth in the euro zone's second largest economy.

Florange's blast furnaces have stood idle due to a lack of orders since the second half of 2011. 

Sarkozy accused Hollande, who visited Florange last week, of "demagoguery" in seeking to exploit the plant's plight for electoral ends.

"He went to Florange, he stood on a truck draped in the CGT (union) flag: that did not produce a single job or a single additional euro for the employees," he said.

Sarkozy has placed employment at the heart of his election campaign since announcing his candidacy last month, stressing that the country will only emerge stronger from its economic turmoil through hard work.

Last week, he intervened to strike a deal with oil company Royal Dutch Shell, to keep the Petit-Couronne refinery in northern France running for at least six more months, after its owners filed for insolvency.

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