Italy says Glencore request for cheap power for Alcoa plant not acceptable

Italy said on Thursday it could not accept requests to provide deeply discounted energy prices to Swiss commodities trader Glencore if it were to agree to purchase the Italian smelter being closed by U.S. aluminium maker Alcoa.

In a statement, the Italian Industry Ministry said Glencore's request for a power price at the plant of no more than 25 euros per megawatt hour could not be accepted since it was not in line with average electricity prices in Europe.

Glencore, one of six companies eying the troubled Alcoa smelter on the island of Sardinia, has made any offer for the smelter conditional on the government being able to guarantee steeply discounted power prices.

Closure of the plant would be a heavy blow for Sardinia which has a 15 percent unemployment rate, well above the national average.

Prime Minister Mario Monti's government has come under intense pressure from trade unions to secure a deal at a time of austerity.

The ministry, citing a letter sent by junior minister Claudio De Vincenti to Glencore, said the 35 euros/MWh previously proposed by the government was a price that was in line with the European average.

The current cost of power for Italian consumers is around 70 euros/MWh.

The ministry said it was ready to help Glencore in talks with energy suppliers, adding it hoped the Swiss group "would finally launch talks with Alcoa for the acquisition of the plant".

Alcoa, the largest U.S. aluminium producer, has decided to shut the plant, blaming high energy costs for undermining its competitiveness.

But it has pledged to maintain the plant for a year in case a buyer comes forward.