Reuters reported that US aluminium producer Alcoa Inc has agreed to keep its Italian plants working for 6 months instead of idling them as planned after the EU ordered it to repay state aid.

Italy's government said that the agreement on the plants which employ about 2,000 people had been struck after talks with Alcoa and unions.

In November, Alcoa said that it would temporarily idle operations at its 194,000 tonne per year smelters at Portovesme in Sardinia and Fusina near Venice after the European Commission ordered it to pay back most of the state aid it had received in Italy since 2006.

A statement from the Prime Minister's office said that the agreement was made possible by a decree that lowers electricity tariffs for heavy corporate energy users. Within 6 months, following the European Commission's decision on the decree and an evaluation by the company, Alcoa will make checks that will take into account the evolution of the market. It said that Alcoa, the government and other parties involved will meet again in April.

The European Union's executive body ruled that Alcoa must repay state power subsidies previously agreed to by the Italian government and the US aluminium producer.

Alcoa argues that USD 300 million penalties imposed by the Commission, currently under appeal, would have a devastating impact given the dramatic decline in aluminium prices amid the global recession.

(Sourced from Reuters)