When economy abandons environmental sustainability: the ILVA steel plant in Taranto

The story of ILVA steel plant in Taranto has attracted during decades the attention of several groups: mass medias, public opinion, national (Italian government, trade unions, municipalities, local NGOs...) and international institutions (European Commission and European Court of Justice). This article provides a short review of ILVA case until today and supports the idea that, in contemporary business models, economic interests and environmental and social parameters should be harmonized in order to guarantee long term financial wealth.


OVERVIEW

Unlike Brindisi, Lecce and many other small burgs on the Salentine Peninsula (Apulia, Italy) where fine baroque churches and buildings constitute an elegant background for the lively urban activities, Taranto is an industrial city. Its strategic position - right in the middle of the gulf after which it is named - has during several centuries ensured the city prosperity and financial wealth.

ILVA plant represents the core of the city economy: founded in 1961 and inaugurated in 1965 by the State-owned company Italsider, the industrial estate has been acquired in 1995 by the Riva group which now consists of 42 plants operating in 8 countries across the world. Employing about 12,000 people - with another 8000 workers depending on it - and accounting for 75% of the economic production in Taranto province, ILVA is the biggest steel production plant in Italy - approximately 10 million tons of steel annually, 40% of Italian steel production - the 3rd in Europe and the 21st in the world by production volume. ILVA plant is also the main employer of the whole South Italy and contributes 0,24% of the Italian GDP (around 4 billion Euros)[1].

In July 1997, the Italian Council of Ministers declared the ILVA steel plant in Taranto as “area at high risk of environmental crisis”[2]. Despite the fact that the negative environmental impact of the plant was well known for years – heavy pollution of the soil, air, surface and ground water in the area of Taranto, especially in Tamburi quarter where “in June 2010 the mayor of Taranto issued an ordinance stating that children should not play in Tamburi public gardens because of the presence of dioxin traces and other pollution particles”[3], a chemical survey ordered by the Court of Taranto produced the first evidences in this regard only in 2012. According to it, in 2010 the plant emitted:

  •   4,000 tonnes of dust
  • 11,000 tonnes of nitrogen dioxide
  • 11,300 tonnes of sulphur dioxide
  •    10.1 million tonnes of CO2
  •      7.0 tonnes of hydrochloric acid
  •      1.3 tonnes of benzene
  •     150 kg of Polycyclic Aromatic Hydrocarbons (PAH)
  •    52.5 g of benzo(a)pyrene
  •    14.9 g of organic compounds, polychlorinated dibenzo-pdioxins and dibenzofurans                    (PCDD/F) and dioxin PCBdl[4]

The survey concludes that the environmental contamination of the area could be mostly addressed to the plant`s activities[5]. The described above environmental criticality generated devastating consequences on public health, local agriculture and livestock farming and tourism.

Public Health

In 2011, the SENTIERI Study demonstrated the presence of an unhealthy environment. In particular, the following mortality profile results in Taranto: “excess between 10% and 15% in overall mortality and in all cancers in both genders; excess of about 30% in the mortality of lung cancer, for both genders; excess, in both genders, in deaths for pleural cancer; excess between 50% (men) and 40% (women) in deaths for serious respiratory diseases; excess of about 15% for men and 40% for women in mortality for diseases of the digestive system; increase of about 5% in deaths for circulatory system diseases, especially among men”[6]. Moreover, as part of the judicial proceedings in the Court of Taranto, an epidemiological survey published in 2012 shows an unequivocal relation between ILVA plant`s emissions and the high rate of pathologies in the area. In particular, the survey concludes that “386 people living near the plant died between 1998 and 2010 (around 30 deaths per year) because of exposure to toxic emissions such as dioxins and carbon monoxide. Moreover, the survey showed 237 cases of malignant tumor diagnosed by hospitalization (18 cases per year) due to industrial emissions; 247 coronary events with recourse to hospitalization (19 per year) due to industrial emissions; 937 cases of hospitalization for respiratory diseases (74 per year) (most part among the children) due to industrial emissions”[7].

Agriculture and Livestock Farming

In 2013, a study showed that dioxins (PCDDs) and polychlorinated biphenyl (PCB) emitted by ILVA plant moved from the air to the soil and then into the groundwater[8]. Several chemical analysis recorded an high level of toxic substances on vegetable tissues of crops with potentially devastating effects on human health. In the 2008 chemical analysis commissioned by PeaceLink, levels of PCDDs and PAH three times higher than what the law states were found in cheese made from the milk of sheep and goats of the area around ILVA plant[9]. Waters poisoning caused serious damages to fishing activities as well: in 2011, in the Mar Piccolo Bay the cultivation of mussels - for which Taranto is famous in the entire peninsula - was banned due to pollution by dioxin.

Tourism

The national and international resonance of ILVA case had a negative impact on the tourism sector. The appeal of Taranto`s climate, beaches, history and gastronomy has been seriously undermined by the environmental criticality of the area.

JUDICIARY AND POLITICAL DEVELOPMENTS

In 2008, the European Commission reported a “lack of implementation by Italy of the IPPC directive’s (Integrated Pollution Prevention and Control) requirements for authorization of existing installations. The ILVA plant did not have such an authorization”[10].

In 2011, the European Court of Justice confirmed European Commission`s report demonstrating that the Italian government had contravened the IPPC parameters. As a response, the Italian Ministry for Environment issued an IPPC permit - which was implemented in 2012 in order to ensure complete compliance with IED (Industrial Emission Directive), the successor of IPPC – and nominated a Guarantor for the Integrated Environmental Authorization for the ILVA of Taranto.

However, in two official letters (2013 and 2014), the European Commission requested the Italian government to take all the necessary measures to make sure that ILVA steel plant operated in conformity with the Industrial Emissions Directive (IED) and accused it of failing to apply the “polluter pays principle” embodied in the Environmental Liability Directive (ELD).

Again in October 2014, the Commission restated that the Italian government failed to guarantee that the ILVA plant operated in line with the directive of the IED and underlined other serious deficiencies concerning the waste management and the protection of soil and groundwater[11].

At the national level, in 2005 the Italian Supreme Court found the managers of the ILVA plant of Taranto guilty of dangerous emissions of substances and having spread in the surrounding areas a large quantity of mineral dust.

On 12 February 2007 the Court of Taranto sentenced the chief executive (three years’ imprisonment) and the technical manager of the plant (two years and eight months’ imprisonment) for the following charges:

  • failure to adopt precautionary measures against accidents on workplaces;
  • failure to comply with an order issued by the public authority;
  • dangerous emission of substances (failure to prevent emissions of mineral dust and gas);
  • damaging public goods (emissions and their consequences on the soil).             

U.I.L. Provinciale, a trade union, and Legambiente Puglia, an environmental NGO, participated in the trial as civil parties and received a payment of compensation for damages[12].

In 2010 the Prosecutor of Taranto started new preliminary investigations for the so called “environmental disaster crime” (a crime against public safety).

On July 26th 2012, the Judge for the Preliminary Investigations ordered the seizure of part of the steel plant. As a reaction, thousands of ILVA`s employees publicly demonstrated fearing job losses as a consequence of the judicial proceedings and many trade unions supported workers` protest.                                  

In 2015, the Judge for the Preliminary Hearing of the Court of Taranto (GUP) ordered that 3 companies (ILVA S.p.a, Riva FIRE S.p.a. and RIVA FORNI ELETTRICI S.p.a.) and 44 persons should stand trial with the charge of:

  • participation in a criminal association aimed at the commission of crimes against public safety
  • crimes against the public administration
  • misdemeanors against the environment
  • criminal damage
  • dangerous emissions of substances
  • murder
  • injury by negligence

The Ministry for the Environment, municipalities, trade unions, environmental associations and NGOs, relatives of deceased employees of ILVA and common citizens participated in the trial as civil parties.

In January 2015, the Law Decree No. 1 placed ILVA S.p.a. under special administration. It also established that 80% of a new environmental plan`s prescriptions should be met by July 31st 2015.                                                

On July 23rd 2015, during a hearing at the Italian Parliament - with ILVA presenting the state of progress - has been stated that 80% of the requirements which were to be fulfilled by 31 July 2015 had actually been met.

On June 5th 2017, the joint venture AM Investco Italy (85% ArcelorMittal, 15% Marcegaglia group) acquired the entire ILVA steel group, which was in extraordinary administration. In its industrial plan, presented on May 30th 2017, AM Investco Italy assured appropriate investment to guarantee a low environmental impact of the plant. However, around 5000 jobs are foreseen to be cut[13].
 

CONCLUSIONS

Because of the large set of actors involved and the vast net of local, national and international interests which had to be balanced, ILVA case is a severe and high relevant example of environmental non-compliance.

From the economic point of view, the factory’s closure would represent a serious blow for Italian steel sector and a devastating event for the economy of the region. As said before, ILVA plant employs around 12000 people and accounts for 75% of the economic production in Taranto province, while it represents 0,24% of the Italian GDP. This well explains both the Italian government prudence and the trade unions’ opposition to the seizure of the factory. Moreover, if it’s true that, according to the Prosecutor, “ILVA Management would have systematically and with intent organised the production activities in order to maximize the profit to the detriment of the environment, health and safety of workers and citizens”[14], it is also true that the necessary investment in order to reach the European standards may lead ILVA plant to close or to relocate to other more tolerant countries, with critical consequences on regional and national economy. On the other hand, we have already observed that the disastrous environmental impact of ILVA plant generated a depression of other economic sectors (fishing, agriculture, livestock farming, tourism...) which costs are hardly assessable, but that will certainly affect the economic wealth of the region for years.

From the legislative point of view, ILVA case epitomizes a conflict between the right to work and the right to health, both of which are ratified in the Italian Constitution[15]. The position of the workers, that is to defend their jobs at potentially the price of their life, is understandable considering that Apulia has a 30% official unemployment rate. However, it is also clear that the choice cannot be between keeping the plant open along with dangerous emission of polluting substances, or closure of the plant and layoff.

Finally, and that’s the crucial point, ILVA case suggests that contemporary economy pushes toward an industrial holistic approach which considers environmental standards, human health, public safety and financial wealth as a whole. If it`s true that the drama of ILVA plant can be shortly but correctly defined as a “case of corporate non-compliance with applicable environmental legislation and the consequences for the environment and local population”[16], an unquestionable industrial sustainability challenge needs to be posed: may environmental sustainability be considered as a cornerstone not only for the protection of local/national interests and jobs, but also for the long term survivability of the firm? In other words, do green business models promote both the compliance with environmental and legislative standards and the achievement of financial success? If, on the one hand, we look at “leading producers in Germany, South Korea and Japan who have pioneered and championed best available techniques for the sector” and that “far from being weakened by the investment costs are now enjoying strong competitive advantages in a global market place, supporting, rather than damaging their local environment and communities”[17] and, on the other, at British Petroleum`s environmental disaster in the Gulf of Mexico in 2010, at the collapse of an apparel factory building in Bangladesh in 2013 killing many hundreds of workers and at Volkswagen emissions scandal in 2015, we can`t answer other than in the affirmative. The lesson learnt from ILVA case is that industrial approaches that neglect environmental parameters and the needs of broader stakeholder groups allow to maximize short-term profits, but turn out to be catastrophic on the long-distance.

Such a fundamental shift to a more holistic perspective of value creation is first of all a cultural revolution rooted at the core of business models whose economic and social advantages have been recently confirmed in a scientific research publish in Joule[18]. A transition to a green energy powered world would create 24,3 million of permanent, full-time jobs and prevent 3,5 million/year premature air pollution deaths in 2050; in economic terms, it means saving $22.8 trillion/year in 2050 air-pollution costs and $28.5 trillion/year in 2050 climate costs.

REFERENCES

[1] http://www.siderlandia.it/2.0/quanto-costerebbe-la-chiusura-dellilva/
[2] Resolution of the Council of Ministers, 11 July 1997.
[3] Lucifora, A., Bianco, F., Vagliasindi G.M. (2015), Environmental crime and corporate mis-compliance: A case study on the ILVA steel plant in Italy, Study in the framework of the EFFACE research project. Catania: University of Catania.
[4] Sanna, M., Monugzzi, R., Santilli, N., Felici, R., Conclusioni della perizia chimica, 2012, http://www.epiprev.it/materiali/2012/Taranto/Concl-perizia-chimica.pdf.
[5] “Per quanto riguarda il secondo quesito concernente se i livelli di diossina e Pcb rinvenuti negli animali abbattuti, appartenenti alle persone offese indicate nell’ordinanza ammissiva dell’incidente probatorio del 27.10.2010, e se i livelli di diossina e Pcb accertati nei terreni circostanti l’area industriale di Taranto, siano riconducibili alle emissioni di fumi e polveri dello stabilimento Ilva la risposta è affermativa”, Sanna, M., Monugzzi, R., Santilli, N., Felici, R., Conclusioni della perizia chimica, 2012, p. 516
[6] Pirastu, R. et al., SENTIERI - Studio epidemiologico nazionale dei territori e degli insediamenti esposti a rischio da inquinamento: risultati / SENTIERI Project - Mortality study of residents in Italian polluted sites: results, Epidemiol Prev (2011): 1-204, available at http://www.epiprev.it/sites/default/files/EP2011Sentieri2_lr_bis.pdf.
[7] Vagliasindi, G.M., Gerstetter, C., The ILVA industrial site in Taranto, Policy Department A: Economic and Scientific Policy, European Parliament, Brussels, October 2015.
[8] Pascuzzi, S. et al., Contamination of the environmental matrices in agricultural areas produced by industrial discharges: the case study of the land of the city of Statte (Taranto, Southern Italy), Procedia Environmental Sciences 19 (2013) 671-680, available at www.sciencedirect.com.
[9] http://www.peacelink.it/ecologia/a/40532.html
[10] Vagliasindi, G.M., Gerstetter, C., The ILVA industrial site in Taranto, Policy Department A: Economic and Scientific Policy, European Parliament, Brussels, October 2015, p. 11.
[11] European Commission, European Commission urges Italy to address severe pollution issues at Europe's biggest steel plant, Press release, 16 October 2014, http://europa.eu/rapid/press-release_IP-14-1151_en.htm.
[12] Vagliasindi, G.M., Gerstetter, C., The ILVA industrial site in Taranto, Policy Department A: Economic and Scientific Policy, European Parliament, Brussels, October 2015, p. 13
[13] http://www.ilcorrieredelgiorno.it/wp-content/uploads/2017/05/ILVA-Presentazione-MiSE-Piano-AM-v11quater.pdf
[14] Vagliasindi, G.M., Gerstetter, C., The ILVA industrial site in Taranto, Policy Department A: Economic and Scientific Policy, European Parliament, Brussels, October 2015, p. 23
[15] Costituzione della Repubblica Italiana, Art 4: “La Repubblica riconosce a tutti i cittadini il diritto al lavoro e promuove le condizioni che rendano effettivo questo diritto. Ogni cittadino ha il dovere di svolgere, secondo le proprie possibilita’ e la propria scelta, un’attivita’ o una funzione che concorra al progresso materiale o spirituale della societa’” and Art. 32: “La Repubblica tutela la salute come fondamentale diritto dell'individuo e interesse della collettività, e garantisce cure gratuite agli indigenti.”
[16] Tonelli F., Short S.W., P. Taticchi P., Case study of ILVA, Italy: The impact of failing to consider sustainability as a driver of business model evolution, 11th Global Conference on Sustainable Manufacturing, Berlin, 2013, p. 30
[17] Ibidem
[18] Jacobson et al., 100% Clean and Renewable Wind, Water, and Sunlight All-Sector Energy Roadmaps for 139 Countries of the World, Joule (2017), http://dx.doi.org/10.1016/j.joule.2017.07.005

BIBLIOGRAPHY

 

Cristian Riva

 
 
.