The Italian government's multi-year rescue plan for its steel industry has suffered a major setback. On October 29, Italy's Court of Cassation rejected an appeal by companies related to the Taranto steel plant, upholding the ruling to shut down its blast furnaces and stop high-temperature steelmaking. The court held that continued operation would pose serious risks to residents' health and the environment, calling the earlier shutdown ruling 'correct and reasonable'.
This means what was once Europe's largest steelworks may lose its core steelmaking capacity. The plant directly employs about 8,000 people and is Italy's only large steelworks capable of completing the entire steelmaking process from iron ore. Since taking office in 2022, the Meloni government has funneled about 5 billion euros into the company through direct state funding and the Italian state investment agency, yet has failed to resolve its long-standing environmental, debt and operational problems.
The ruling stems from long-running lawsuits by Taranto residents over environmental and health issues. In July, the Milan Court of Appeal ordered the plant to stop operating blast furnaces and other high-temperature facilities within a set deadline unless the company could remove asbestos from the facilities and reduce dust emissions to safe levels. The company appealed, hoping to keep the furnaces running during remediation and sale.
The supreme court ultimately sided with residents, noting that about 2,140 tons of asbestos remain in the blast furnaces' hot-blast stoves and associated equipment. Hot-blast stoves feed air at up to about 1,400 degrees Celsius into the furnaces, potentially releasing asbestos fibers into the environment. Citing data showing mesothelioma incidence in Taranto and nearby areas at about four times normal expected levels, the court held that preserving jobs cannot come at the cost of residents' lives and health.
The direct consequence is that the blast furnaces and the entire high-temperature production zone will gradually shut down. The timing and technical steps will be decided by the commissioner managing the company, but Italian media widely believe that once the existing furnaces are fully shut, restarting them will be very difficult. The operator has previously warned that losing the blast furnaces could ultimately lead to a permanent end to steel production at the Taranto site.
The outcome puts the Meloni government in a dilemma. On one hand, the plant has been plagued by pollution and health problems for decades, and continued operation requires stricter environmental standards. On the other, it is Italy's only integrated large steel base, supplying construction, automotive and other manufacturing sectors. Once domestic blast-furnace capacity disappears, some production may rely on externally sourced billets, raising costs and weakening the autonomy of Italy's steel industry chain.
The plant's crisis has lasted more than a decade. After privatization, judicial investigations and rounds of government intervention, ArcelorMittal was brought in as operator, but the partnership collapsed. In 2024, the government placed the operator, Acciaierie d'Italia, under special administration and began seeking a new buyer.
The Meloni government has made preserving Taranto's production capacity a key industrial policy goal, providing about 5 billion euros since 2022 while proposing to gradually reduce traditional blast furnaces, build electric arc furnaces and decarbonize steel production. After the verdict, the Prime Minister's Office acknowledged the ruling 'further complicates' an already very difficult corporate restructuring.
The really thorny issue is jobs. The plant has about 8,000 direct employees, with more jobs among outside contractors and related industries. In mid-October workers staged a five-day strike and blockaded the nearby Eni refinery, causing fuel shortages at some gas stations in southern Italy. Unions say the government is relying on temporary layoff subsidies to preserve employment without a sufficiently clear long-term plan.
Another sensitive point is that the plant is seeking new investors. The government has extended the deadline for binding acquisition offers to early November, hoping potential buyers will reassess the company's value after the supreme court ruling. India's Jindal Steel International is seen as the leading potential buyer for the whole company, while a group of domestic steel companies coordinated by the Italian steel federation is mainly interested in selected production assets.
After the Milan court ordered the high-temperature zone closed, potential investors had already begun adjusting acquisition plans under different production scenarios, and Jindal updated its offer accordingly. The supreme court's final ruling removes legal uncertainty over whether the blast furnaces can be retained, forcing buyers to reassess investment costs, capacity arrangements and profitability without traditional steelmaking — which will affect final offers.
For the Meloni government, the early-November offers will be the next key milestone. If no investor willing to bear the costs of environmental retrofit, industrial transition and employment is found, the government may have to inject more public funds or accept a sharp contraction of steel production at Taranto. With Italy's next parliamentary election approaching, how to respond at once to residents' demands for a healthy environment, workers' job concerns and manufacturers' need for domestic steel supply has made Taranto once again one of the Meloni government's toughest problems.
