Italian PM says ArcelorMittal wants mass layoffs, government rejects demand

ROME (Reuters) - Steel giant ArcelorMittal <MT.AS> wants to cut 5,000 jobs in Italy because of low production levels at its Taranto plant, Italian Prime Minister Giuseppe Conte said on Wednesday, denouncing the plan as "unacceptable".

The mooted layoffs at the Ilva steelworks in Taranto came just two days after ArcelorMittal announced that it planned to pull out of a year-old deal to buy the Italian company.

ArcelorMittal blamed its decision at time on the government's failure to renew a legal shield it had previously provided which gave the firm immunity from prosecution while it cleaned up the heavily polluting plant.

Conte met ArcelorMittal managers earlier in the day and said it was clear the legal shield had nothing to do with the threat to quit Italy. The real problem was that the firm had not hit its production targets, he told reporters.

"The legal shield is not the issue. The company believes that the current production level of 4 million tonnes a year does not cover its investments and cannot justify current job numbers," Conte said.

There was no immediate comment from ArcelorMittal.

ArcelorMittal took control of Ilva in November 2018 and has some 10,700 employees in Italy, including 8,200 in Taranto -- the largest such steel plant in Europe.

Conte said it had aimed to produce 6 million tonnes of steel a year in Taranto. He added that ArcelorMittal could not turn around one year into its contract and announce that its plan was no longer viable.

The prime minister said he had given ArcelorMittal two days to rethink its position, but acknowledged that he had received no commitment from the company to review its stance.

"It is premature to say how this will end. The layoff plan they have presented is clearly unacceptable. Any layoff plan is unacceptable," Conte said, adding: "This first meeting does not give us much hope."

(Reporting by Crispian Balmer and Giuseppe Fonte; Editing by James Mackenzie and Lisa Shumaker)