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Alcoa rejects Rome call to keep Italy plant running

ROME (Reuters) - Aluminum giant Alcoa said on Friday it will push ahead with its plans to close a smelter in Italy, rejecting Rome's calls to keep operations on the island of Sardinia running as a battle around the struggling plant heated up.

Alcoa said on Monday it planned to close its Portovesme smelter in Italy and slash output at two Spanish smelters, part of a broader effort by the U.S. aluminum producer to cut its global output by 12 percent and reduce costs.

On Friday, the government asked Alcoa to suspend a collective dismissal procedure, known as mobilita in Italian, which usually leads to closing a business, and instead offered to work together to find alternative solutions, the industry ministry said in a statement.

But Alcoa has rejected such proposals and confirmed its decision to close Portovesme on the island of Sardinia.

"We just could not accept a delay, so we have rejected this proposal to delay the beginning of the mobilita procedure. We consider the procedure to have begun," Alessandro Profili, in charge of European affairs at Alcoa, told Reuters after a government meeting.

Alcoa's decision has run into fierce opposition from labor unions and authorities of Sardinia who say it would cost the jobs of about 1,500 people linked to the plant directly and indirectly and would deal a heavy blow to the island's economy.

"The rules of the game are not only those set by financial markets but also those which oblige (companies) to do business respecting economic and social impact on the country," Sardinia's President Ugo Cappellacci said in a statement adding he was "dismayed by Alcoa's unreasonable attitude."

Trade unions present at the meeting condemned Alcoa's rejection of the government proposals and said they were getting ready for protest actions.

"The government has shown an intention to look for possible solutions linked to energy costs," Luigi Barra, a representative of Cisl union, told reporters after the meeting in Rome.

Alcoa's Profili said high electricity costs were not the only reason to close down the Portovesme smelter, one of the most expensive plants in the group.

"Energy is the big point but it's not only that. There are some structural deficiencies at Portovesme ... We just do not find some of the services and materials in Sardinia anymore. Everything has to be brought in and it adds to the costs," he said.

The government has understood Alcoa's decision and wanted to mitigate the social impact of the closure, Profili said.

"We also want to mitigate the social impact but we want to do it in the framework of the mobilita procedure," he said.

But the industry ministry said Alcoa's rejection of its proposal was "inexplicable" and the company was turning its back on a special decree the government passed in 2010 offering favorable power supply conditions to some industrial consumers to convince Alcoa to keep its Italian plants working.

Profili said Alcoa was not planning to close another Italian plant, the Fusina rolling mill near Venice, which is well integrated in the group.

"Nothing is going to happen to Fusina," he said.

An Italian industry body has said closure of Portovesme, the country's only producer of primary metal, would hit competitiveness of the national aluminum industry.

(Reporting by Massimiliano Di Giorgio in Rome, Svetlana Kovalyova in Milan; editing by Keiron Henderson)

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