Alcoa plant gets EU boost on Italy power prices
MILAN (Reuters) - The troubled Italian smelter of aluminum group Alcoa (AA.N: Quote) will be able to continue using special contracts allowing it to buy electricity at lower prices until 2015 following a decision on Wednesday by the European Commission.
The Commission ruled the so-called interruptibility power contracts on the islands of Sardinia and Sicily did not constitute state aid, giving a green light to the schemes being used by heavy-energy users there for the next three years.
A statement by the Commission did not mention any company.
Alcoa has decided to shut its aluminum smelter in Sardinia, blaming high power prices for undermining its competitiveness.
The Italian government is looking round for a possible buyer of the plant to avoid job losses on an island that already has a 15 percent unemployment rate.
"This is good news for the government though the extension is only for three years and that might deter potential buyers of the Alcoa plant," an industry source said.
Swiss commodities trader Glencore (GLEN.L: Quote) recently suspended talks over a possible offer for Alcoa after Italy rejected its request for sharply discounted power prices.
Glencore had asked for a power price at the plant of no more than 25 euros per megawatt hour for 10 years compared to a price of 35 euros/MWh proposed by the government.
Glencore is one of a series of companies eyeing the Alcoa smelter. Continued...