* ArcelorMittal withdraws French site bid for EU-funded
* Move throws into question a deal to preserve Florange site
* Hollande says all promises for site will be kept
PARIS, Dec 6 (Reuters) - A politically charged deal between
the French government and ArcelorMittal to preserve jobs at an
ailing steelworks looked at risk of unravelling on Thursday
after the global steel giant ditched a bid to run an EU-funded
ArcelorMittal, 40-percent owned by India's Mittal
family, withdrew an application to use the Florange site in
northern France for an EU "green steel" pilot project that Paris
had hoped could keep two idled blast furnaces going.
ArcelorMittal and Prime Minister Jean-Marc Ayrault said the
move did not mean the idea of using Florange for the ULCOS
project to make steel with fewer greenhouse gas emissions was
being permanently abandoned.
Separately, President Francois Hollande said all promises
made to save the Florange site would be kept.
"I've seen the distress and anger and I know what's caused
it. But my responsibility is to make sure Florange has a
future," he told journalists in Paris.
A source close to the president said Lakshmi Mittal had made
a promise to run an ULCOS project at the site, and that only a
first version of the plan had been ditched.
Unions and local politicians reacted angrily to the news,
with metalworkers briefly occupying the furnaces, and other
employees staging sympathy action at two other ArcelorMittal
"We urge Francois Hollande: retake control of this issue,"
CFDT trade union leader Edouard Martin told i>Tele
television, warning the president to "stop these lies, this
ArcelorMittal, which has been under fire for months in
France over its plan to permanently shut the Florange furnaces
on the grounds they are not economically viable, said it could
not currently pursue the ULCOS project for technical reasons.
"(This) is perfectly coherent with what is in the agreement
signed with the French government," the company said, adding:
"This in no way means the ULCOS project is being abandoned."
Firebrand leftist Minister for Industrial Revival Arnaud
Montebourg raised the stakes last week by declaring Indian steel
magnate Lakshmi Mittal unwelcome in France and accusing him of
lying. He also threatened to nationalise the steelworks, raising
workers' hopes that were dashed by last Friday's deal.
Ayrault, whose government was appointed by Hollande after
the Socialist was elected president in May, said in a statement
that the European Commission had indicated that the project
could be pursued in a future tender.
Asked about the deal, Ayrault told the Senate that the
government had achieved its goals. "There will be no lay-offs:
that was the objective we had set for ourself."
But in the most optimistic case, a potential start date
would now be delayed by several years, throwing into question
the idea that ArcelorMittal would keep spending money to keep
the mothballed furnaces in working order.
A survey by pollster OpinionWay underscored a loss of faith
in the government, with 76 percent of respondents saying they
did not believe it could keep ArcelorMittal to its promises.
Metalworkers at ArcelorMittal's Fos-sur-Mer plant in
southern France blocked the site's entrances to show solidarity
with their peers at Florange. Workers in the plant's finished
products section went on strike.
Union leaders at the company's Basse Indre plant in eastern
France called for a 24-hour strike next Monday. Florange workers
left the furnaces after being told a gas main that keeps it from
falling into disuse would be kept on.
"We're angry to see Florange workers and their union
representatives treated this way," said Michel Tosi, a CFDT
leader at Fos. "They were fooled."
Michel Liegbott, a Socialist lawmaker for the surrounding
Moselle region, told BFM television that the government had
broken its commitments with regard to Florange.
"We've been conned. They are liars," he said. "They should
have said what they are saying today six months or a year ago."
Last week's agreement, under which ArcelorMittal committed
to preserve some 630 jobs at the two blast furnaces, was a
crucial test of Hollande's pledge to stem a run of industrial
lay-offs and revive French competitiveness.
France's unemployment rate hit a new 13-year high of 10.3
percent in the third quarter of the year, data showed on
Thursday, piling more pressure on Hollande, who has vowed to
halt the rise by the end of 2013.
ArcelorMittal had agreed to invest 180 million euros ($235
million) in Florange and keep the furnaces in working order so
they could be used if its application to use the site for the
ULCOS project was successful.
ULCOS (Ultra-Low Carbon Dioxide Steelmaking) is a consortium
of 48 European companies and other organisations working to
develop ways to cut CO2 emissions from steel production in order
to curb the greenhouse gases blamed for global warming.
A European Commission spokesman confirmed on Thursday it had
received written notification from ArcelorMittal that it had
decided to withdraw its bid "due to technical difficulties".