Acciaierie d'Italia begins exclusive sales talks with Azerbaijani consortium

Italian steelmaker Acciaierie d'Italia has initiated exclusive negotiations for the sale of Italy's second-largest flat steel plant to an Azerbaijani consortium, Italian Minister of Enterprises Adolfo Urso and sources close to the deal said March 20.

The Azerbaijani long steelmaker Baku Steel, along with the Azerbaijan Investment Co., a government fund to invest capital into non-oil sector, have reportedly been shortlisted by the commissioners of ADI, according to a source familiar with the negotiations.

"The administrators announced that today [March 20] they will send a formal request to be authorized to negotiate with the international entity that has made the best proposal, which is likely to be that of the Azerbaijani group," Adolfo Urso said during a sideline event in Bologna, Northern Italy. "The procedures then require the expression of opinion from the supervisory committee and subsequently the resolution of the Ministry of Enterprise. This opens a new, important, decisive phase of the negotiation."

ADI has been under extraordinary administration since Feb. 20, 2024, with three commissioners appointed to run and sell the company following a request from the state investment agency Invitalia, in opposition to the then main shareholder, ArcelorMittal.

Baku Steel was one of three offers received for the entire business complex, along with Bedrock Industries and Jindal Steel International. ADI received seven offers, but these were for individual assets rather than for the entire company.

Baku Steel is a relatively smaller player in the steel industry, with an annual production capacity of 800,000 mt, utilizing a modern 60-mt electric arc furnace. The company primarily produces long products, whereas ADI focuses on flat products, making the two companies complementary if the deal is finalized.

Also, Italy and Azerbaijan share a close relationship, as Azerbaijan supplied about 10.3 Bcm of gas to Italy in 2024, making it the second-largest single gas supply source to Italy, after Algeria, according to data from market manager GME.

ADI currently operates two blast furnaces that produce around 9,000 mt/d of crude steel, with a target production of 3.6 million to 4 million mt by 2025. Looking ahead, ADI aims to produce low-carbon steel and plans to build a direct reduced iron plant with a capacity of 2.5 million mt. To operate a DRI plant efficiently, access to affordable gas will be crucial.

Platts, part of S&P Global Commodity Insights, assessed hot-rolled coil South of Italy at Eur620/mt base ex-works, stable on the day, while HRC Northwest Europe was assessed at Eur635/mt ex-works Ruhr March 19, up Eur5 day over day.