By Nicholas Vinocur and Myriam Rivet
PARIS (Reuters) - The French government has found an industrialist willing to invest 400 million euros to renovate ArcelorMittal's Florange steelworks in northeast France, a minister said on Wednesday.
Raising pressure on the group to agree to a sale, Industry Minister Arnaud Montebourg told lawmakers the interested party was a private steel industry investor who wanted to inject money into the site with financial backing from the state.
Montebourg has been pushing hard for the Florange steelworks to be taken temporarily into state hands if Luxembourg-based ArcelorMittal refuses to keep two threatened blast furnaces running.
"(The party) is ready to invest nearly 400 million euros to renovate this site," Montebourg told parliament during question time, without giving the potential investor's identity.
Montebourg, who spoke as metal workers protested outside the National Assembly, said the aim was for the operation to have zero cost to public finances and that government stakes in other companies could be used to finance a purchase of Florange.
He added that France was ready to move ahead with a temporary takeover of the site if no deal was reached. The government would compensate ArcelorMittal for the takeover and let a private industrialist run the steelworks while it looks for a permanent buyer to operate it.
Union officials later said Montebourg had told them the government was considering selling a 1 percent stake in energy group GDF Suez to finance a rescue of the steelworks, which has become emblematic of President Francois Hollande's struggle to stem a wave of industrial layoffs.
However, Montebourg later issued a statement saying that the sale of GDF shares was not under consideration. It said that he had told unions that a temporary nationalisation would have no net impact on the state finances if it were offset by the sale of state-held shares.
CFDT union official Jean-Marc Vecrin had earlier told reporters that the government had told union members that it expected it could raise 420 million euros from the sale of GDF shares. A second CFDT union official had also said the government was mulling the sale of GDF shares.
President Francois Hollande told journalists in Paris that talks were taking place with ArcelorMittal and potential buyers, a day after he pressed Chief Executive Lakshmi Mittal to keep the furnaces running.
"He is waiting for Mr. Mittal to come up with a proposal other than the site's closure, or else the government intends to nationalise it temporarily," said Edouard Martin, a Florange union leader camping in front of France's finance ministry.
ArcelorMittal has so far said it wants to sell only the idled furnaces and not the entire site, a steelworks that employs some 600 people in the heart of what was once French steelmaking country near the German border.
The company has told France's Socialist government that it plans to shut the furnaces, which it says are no longer economically viable, unless a buyer willing to take them over can be identified by December 1.
Steel industry experts say it would be tough to find a buyer for the furnaces alone without the adjacent steel plant.
"Discussions are ongoing," a London-based spokesman for ArcelorMittal said when asked if the firm would be ready to sell the Florange steelworks. He would not elaborate.
Earlier, Finance Minister Pierre Moscovici said the prospect of a temporary nationalisation of Florange was a special case and did not meant that further state takeovers for threatened factories were being prepared.
The government owns 36 percent of GDF Suez. One percent of the company's capital would be worth 408 million euros at Wednesday's share price of 16.92 euros.
(Additional reporting by John Irish, Leigh Thomas and Miriam Rivet in Paris and Philip Blenkinsop in Brussels; Editing by Catherine Bremer and Jason Webb)