Workers protest as Alcoa says to shut Italy plants

By Daniel Flynn

ROME, Feb 2 (Reuters) - Hundreds of Alcoa  workers marched through Rome on Tuesday in protest at plans to mothball two smelters in Italy, after the U.S. aluminium giant said it needed written assurances from Brussels before reconsidering.

Some 700 workers from Alcoa's plants at Fusina near Venice and Portovesme on the island of Sardinia marched to Italy's parliament ahead of a meeting between company executives, the centre-right government and trade unions later on Tuesday.

The workers were due to stage a sit-in outside the office of Prime Minister Silvio Berlusconi, who is currently on an official visit to Israel.

Berlusconi, battling to control rising unemployment, wrote to Alcoa CEO Klaus Kleinfeld last Friday asking him to rethink plans to shut its smelters on Feb. 6, following a European Commission ruling that it must repay state power subsidies.

Berlusconi offered to cut energy costs for the larger smelter in Sardinia and to intercede with the Commission. He said that if the plants closed it could change his government's relations with multinational companies.

However, in a letter dated Monday obtained by Reuters, Kleinfeld said the $300 million penalty imposed by the European Commission would have a "devastating impact" on Alcoa at a time when prices have fallen 60 percent.

The company would vigorously appeal the ruling but in the meantime it was losing $8 million a month at its Italian smelters, he said.

"We can now only delay the curtailment if we receive written EC approval that the proposed solution is safe and legal, or written assurance from EC leadership that they will rule on the proposal by the end of February," Kleinfeld said.

"If we do not receive that written assurance this week, we will ... begin an orderly shutdown of the smelters so that we can bring them back to service as quickly as possible once the issue is resolved," he said.

The closure of the two plants, which employ some 2,000 workers, has made headlines at a time when Italy is slowly recovering from its worst downturn since World War Two, amid signs its industrial exports are becoming less competitive against Asian competition.

Unions appealed to the government on Tuesday to redouble efforts to keep the plants open. Even Pope Benedict on Sunday urged Alcoa and carmaker Fiat , which plans to shut a factory in Sicily, to safeguard jobs.

Unemployment in Italy rose to 8.5 percent in December, the highest since monthly records began in January 2004. That figure hides the fact that Italy has one of the lowest workforce participation rates in the industrialised world: only 22 million people from the 60 million population are in work.