Italy says reaches Alcoa energy deal, company denies

MILAN, Dec 10 (Reuters) - Italy's Economic Development Ministry said the government had reached a deal on energy supplies with U.S. aluminum group Alcoa Inc to keep its Italian plants working after a regulatory setback, but the company said it hadn't resolved the issues yet. In November, Alcoa said it would temporarily idle operations at its Italian smelters with a total capacity of 194,000 metric tonnes a year, after the European Commission ordered it to pay back most of the state aid it had received in Italy since 2006. The government has made "an exceptional commitment" to find "extraordinary instruments" to lower the cost of energy supplies for Alcoa, the ministry which held talks with Alcoa said in a statement on Thursday. The ministry has not specified those instruments but said they would kick in at the start of January. Alcoa spokesman Kevin Lowery confirmed Thursday's talks, but said that no deal had been signed and they were still negotiating. "We're appreciative of the government's efforts...but we also told them that we reserve judgment on the effectiveness of these tools until we further review them," he said, without giving details of the tools. "One of the key aspects is that the proposals they put forth, we want to make sure they are going to be consistent with the EC regulatory requirements," said Lowery. Alcoa's management has recognised the government efforts to ensure energy supplies on competitive conditions and has pledged not to suspend the work of its Italian units until the next meeting with the government scheduled for Jan. 7, the ministry said. It said the agreement has been backed by unions which protested last month against the possible closure of Alcoa's Italian smelters. Alcoa has set a deadline of Dec. 21 to determine the cost of its power supplies in Italy in 2010. On the basis of that, it would take a decision on whether to stay in Italy. (Reporting by Svetlana Kovalyova; additional reporting by Carole Vaporean; Editing by Marguerita Choy)