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Steel company ArcelorMittal (MT, MT.FR, MT.AE) said Tuesday it has proposed idling its electric arc furnace and continuous caster at Schifflange, Luxembourg, indefinitely due to continued weakness in the European construction market.

ArcelorMittal Rodange & Schifflange, a unit of the world's largest steelmaker by production, said labor unions have been informed about its intention to idle the plant.

The Luxembourg steelmaker said 282 people would be affected by the proposal out of a work force of 626 at its Schifflange and Rodange sites. Still, the measures the company announced to indefinitely idle operations were focused on Schifflange, not Rodange.

ArcelorMittal plans to redeploy all affected employees to other sites in Luxembourg or keep them via an internal-redeployment cell. Some 220 people from Rodange and Schifflange already have been relocated to other sites, it said.

"Unfortunately the construction market, for which the products in Rodange and Schifflange are made, hasn't recovered from the downturn that started at the end of 2008 and there is still no sign of a meaningful improvement," said Nico Reuter, vice president of ArcelorMittal Long Carbon Europe and president of the unit's board of directors.

ArcelorMittal has lost more than EUR100 million ($132.3 million) over the last three years from its Rodange and Schifflange operations and remains concerned about future demand given current European construction steel demand is around 20% below 2007 levels. The Schifflange steel plant has been idled since October as a result of the deteriorating European construction market.

ArcelorMittal said it will continue to produce a limited amount of specialty steel products from its rebar mill in Rodange and a wire-rod mill in Schifflange. The section mill in Rodange also will continue to operate on two shifts, as it has since September.

"The situation will be re-evaluated again in the second half 2012 to see whether the economy has improved and whether there is any potential to resume or increase production," ArcelorMittal added.

Rodange and Schifflange specialize in the production of long steel products, sections, rails, rebars and sheet piles.

ArcelorMittal plans to present an industrial plan regarding the site's operations March 28.

"Our first priority is toward the employees who are affected by this proposal and we are working to find a solution for those who are affected," said Michel Wurth, head of ArcelorMittal Long Carbon. "The fact that we are headquartered here [in Luxembourg], combined with our competitive industrial presence, clearly shows the importance this country has and will continue to have for ArcelorMittal," he added.

ArcelorMittal employs more than 5,500 people in Luxembourg and is present at 16 sites in the country.

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

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