The Italian parliament in late June revoked the legal immunity that ArcelorMittal received when it bought the operations, granting a grace period until 2023 to bring the plant up to environmental standards, the company said.

Under the new law, the legal protection at Ilva - Europe's largest steel plant - ends at midnight on Sept. 6.

"At that point in time it is very difficult for us to operate the facility further," Chief Financial Officer Aditya Mittal told a results conference call.

"We are working with the Italian government to institute legal safeguard measures and our expectation is that those measures would be in place before the 6th of September."

When asked by an analyst if the company would walk away from the plant if the legal immunity was not renewed, Mittal said the company had "certain protections" under its contract, but declined to give details.

In January, the European Court of Human Rights condemned Italy for failing to protect citizens from the polluting Ilva plant in the southern city of Taranto, which has been blamed for hundreds of cancer-related deaths.

Besides the 1.8 billion euro cost of acquisition, ArcelorMittal had said it would invest 1.2 billion euros to boost productivity and 1.1 billion euros to curb pollution.

However, the Court described the clean-up plan agreed, which is not due to be completed until 2023, as "extremely slow".

ArcelorMittal, which accounts for about 6% of world steel production, cut its forecast for global steel demand on Thursday, with a sharper reduction now envisaged in Europe due to a lean automotive market.

(Reporting by Eric Onstad; Editing by Alexandra Hudson)