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Alcoa Inc. (AA) has agreed to delay closing its Italian aluminum smelter until at least September while it looks for potential buyers, the company said on Wednesday.
Alcoa had planned to close its Portovesme smelter in Sardinia during the first half of the year. But the company said it has reached an agreement on Tuesday with labor unions and Italy's Ministry of Economic Development to extend its life while seeking a buyer for the plant.
The company in January announced plans to cut about 12% of its aluminum smelting capacity in an effort to shed its most expensive operations amid excess capacity in the industry worldwide and slumping prices for the lightweight metal. The Portovesme smelter has capacity to produce about 150,000 metric tons of aluminum a year, and employs 501 people.
"We're obviously committed to working with the government to attract a potential buyer and reach a resolution there that's in the best interests of our employees and the local community," said Libby Archell, an Alcoa spokeswoman.
Under the agreement, if no prospective buyer has signed a letter of intent by the end of August, the curtailment process will begin Sept. 1, Alcoa said in a statement. If a buyer steps forward before that deadline but the sale has yet to be finalized by the end of October, Alcoa would begin closing the plant on Nov. 1, the statement said.
In either case, Archell said Alcoa will cease its operations at the plant by Dec. 31 at the latest. Archell said the company would continue to pay employees at the smelter for the month of curtailment and the following month.
FIM-CISL, Italy's metal workers union, said in a statement that it was happy with the deal. Under the agreement, the union said, employees at the smelter will obtain one year of unemployment insurance under a temporary layoff program, with the potential for a one-year extension.
In January, Italy's industry minister said Glencore International PLC (GLEN.LN) had expressed interest in the smelter, which is located near one of its lead and zinc plants.
As part of the plan announced in January, Alcoa said it would temporarily idle parts of two smelters in Spain. In the U.S., the company said it would permanently shut already-idled smelting operations in Alcoa, Tenn., and Rockdale, Texas.
--By Matt Day, Dow Jones Newswires; 212-416-4986; email@example.com
--Giada Zampano and Andrea Hotter contributed to this article.