Alcoa still making metal in Italy before idling ops

NEW YORK Nov 23 (Reuters) - Alcoa Inc (AA.N), which said it will idle its two smelters in Italy in a dispute over state subsidies and power supplies, will keep producing aluminum at the plants for about a month, the company said on Monday.

"We are still making metal there today and we anticipate that will continue until the latter part of December," spokesman Kevin Lowery told Reuters.

He said production at the smelters in Fusina and Portovesme will then be curtailed as the company seeks to resolve the issues with the European Commission.

Last week, Alcoa said it will temporarily idle operations at the smelters after the EC ordered it to pay back most of the state aid it has received in Italy since 2006.

Alcoa said it would appeal the ruling and was curtailing operations at the smelters because of the uncertainty in obtaining future power supply and the financial impact of the EC decision. The EC did not say how much Alcoa has to repay.

Without the state aid, Alcoa said, the two smelters are not viable at current Italian power rates. Between them, the two plants employ about 1,000 with an additional 1,000 indirect jobs, and have combined capacity of 194,000 metric tons of aluminum per year. That's about 4 percent of Alcoa's total global capacity of about 4.8 million tonnes.

Lowery said Alcoa's current global capacity is down about 24 percent as a result of the economic downturn that hit demand in the past year.

Statistics from the Brazilian Aluminum Association (ABAL) on Monday showed that Brazil's primary aluminum output in October fell 16 percent compared to the same month last year.

Data showed cuts at Alcoa's Pocos de Caldas and Sao Luis units resulted in a 10.5 percent drop in the company's aluminum production in Brazil.

Alcoa's stock was down 2 cents at $13.11 in afternoon trading on the New York Stock Exchange.

(Reporting by Steve James; Editing by Phil Berlowitz)

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