ArcelorMittal CEO Lakshmi Mittal said on Saturday he regretted that the steel giant was having to permanently close two French blast furnaces but high labour and energy costs kept France at a competitive disadvantage.

Mittal, who has drawn fury in France over the closure of the decades-old furnaces, said ArcelorMittal had every intention of remaining in the country for the long term, but its export potential was limited by constraints on competitiveness.

"To increase the productivity of our sites in France, we need energy costs to come down, like in the United States and Germany," Mittal said in an interview with the weekly Journal du Dimanche.

"In France, labour costs are 20 percent higher than in Spain and labour laws are still too rigid."

A long battle by trade unions to save the furnaces, which employed 629 people, has turned Florange, the last survivor in a once vibrant steel region in northeast France, into a symbol of industrial decline.

Mittal's comments came as President Francois Hollande is close to passing a reform to loosen labour laws, a first step towards curbing industrial layoffs. But his flagship scheme of using corporate tax rebates to kick-start investment is proving slow to take off.

The furnaces at Florange, built to be near a now-defunct mining industry in the region, now make little economic sense compared to others on the north coast fed by imported steel ore.

Even using that slab for Florange's mills, demand has slumped from car makers in the region hit by flagging sales.

ArcelorMittal is investing 180 million euros ($235.47 million) in its remaining hot strip and cold-rolling operations at Florange as it develops high-end products for the auto and packaging industries. It is betting on steel demand rising 3 percent in 2014 as it recovers from a 9 percent slump in 2012.

"At this rhythm, in 2020 we will still not have got back to the levels we saw in 2007," Mittal said. "Our sites will remain in overcapacity. And the European steel industry is not competitive enough to export."

Siding, for once, with Industry Minister Arnaud Montebourg, he said cheap imports were hurting Europe's steel industry.

"It is a pity that Europe does not act together against the low-cost steel imports from emerging countries," he said. ($1 = 0.7644 euros)

(Reporting by Catherine Bremer; Editing by Stephen Powell)