(Bloomberg) -- The Italian government is set to become the main shareholder of the country’s biggest steelmaker, after ArcelorMittal SA refused to inject fresh funds.

The Acciaierie d’Italia steelworks, based in the southern city of Taranto, has long been struggling to return to sustainable production levels as it combats rising energy costs and weaker industrial demand.

“ArcelorMittal has said it is willing to accept a minority stake, but not to contribute financially,” Industry Minister Adolfo Urso told lawmakers in Rome on Thursday. He added that the plant’s blast, formerly known as Ilva, needs “a drastic move to mark a clear turning point compared to the past 10 years.”

Labor unions are due to hold another round of talks Thursday evening with officials in Prime Minister Giorgia Meloni’s government.

A representative for Acciaierie d’Italia declined to comment on Urso’s remarks.

Meloni’s administration, after a meeting with representatives of the company earlier this week, proposed to raise its stake in Acciaierie d’Italia to 66% from 38% with the injection of €320 million ($351 million) of fresh capital via state-owned vehicle Invitalia Spa.

The acquisition of the majority stake reflects an interventionist trend which has seen Meloni’s right-wing government step into several long-running corporate sagas, including Telecom Italia SpA and Banca Monte dei Paschi di Siena SpA.

The most pressing issue for the plant is finding sufficient funds to keep production going. The steelworks are producing less than 4 million tons per year, a record low level that compares with a maximum potential capacity of around 10 million tons. The plant blast furnaces are shut down or working occasionally.

--With assistance from Jerrold Colten.

(Updates with Acciaierie in fifth paragraph)

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