Steel titan ArcelorMittal (MT) said Thursday it has presented to French labor union representatives a proposal to extend into the second quarter the temporary idling of part of its Florange steel plant, as a result of continued weak European steel demand, but said it will continue investing in its French sites.

ArcelorMittal last year shut down its two blast furnaces at Florange in response to weak steel demand, but is still operating other facilities at the plant including hot and cold rolling mills, a coke plant, and coating lines.

The extension of the temporary idling affects 500 temporarily unemployed staff, for whom interim training and redeployment opportunities are being offered. Florange, which employs 2,800 workers, can produce up to 1.4 million metric tons of crude steel annually.

The extension of the temporary idling "is fully justified by the current European economic and industrial context," said Herve Bourrier, chief executive of ArcelorMittal France.

"Europe is indeed in a recession and the economic and industrial recovery will be slow while prospects of a return to the 2008 [high demand] situation are more remote than originally anticipated," Bourrier said, adding that ArcelorMittal would continue to carry out all measures to enable a restart if the market situation permits.

Steel demand in Europe dropped 1.3% in 2011 and steel deliveries at the moment are about 20% lower than they were before the 2008-2009 crisis, Bourrier said. Real European steel consumption is forecast to fall 2% in 2012, marking a 16% decrease compared with the first quarter 2008.

Bourrier said ArcelorMittal was acting in a responsible manner.

"It cannot under any circumstances produce steel it will not be able to sell," he said. "ArcelorMittal must adjust to an increasingly fluctuating demand and to markets that have become extremely volatile."

He said France remains a priority area for ArcelorMittal and said that the company "will keep investing in its sites on a regular basis."

-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328; alex.macdonald@dowjones.com

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