Glencore pulls out of Alcoa plant talks over energy row: sources

MILAN Sat Sep 29, 2012 11:26am EDT

The logo of Glencore is seen in front of the company's headquarters in the Swiss town of Baar September 7, 2012. REUTERS/Michael Buholzer

The logo of Glencore is seen in front of the company's headquarters in the Swiss town of Baar September 7, 2012.

Credit: Reuters/Michael Buholzer

MILAN (Reuters) - Swiss commodities trader Glencore (GLEN.L) has suspended talks with Italian authorities over a possible offer for an Italian plant being closed by U.S. aluminum maker Alcoa (AA.N), a union leader and a source close to the talks told Reuters.

The decision came after the Italian Industry Ministry rejected a request by Glencore this week to provide discounted energy prices if it were to purchase the Italian smelter.

Alcoa, the largest U.S. aluminum producer, has decided to close down its plant on the island of Sardinia, putting at risk more than 500 jobs. Alcoa has blamed high power prices in Italy for undermining the competitiveness of the plant.

Glencore, one of six companies eyeing the smelter, had made any offer conditional on the government being able to guarantee heavily discounted power prices.

But talks have so far failed to reach an agreement over the energy costs, raising the pressure on Prime Minister Mario Monti to clinch a deal at a time of austerity and job uncertainty.

In a letter to the Italian industry ministry and the Sardinian governor, Glencore said it would not continue talks under current conditions, a union leader and another source close to the talks said on Saturday.

"We confirm that in the current situation we are not interested in continuing the talks, considering that the current owner of the plant at the same conditions is accumulating significant losses which have led to the decision of shutting down the plant," Glencore said in the letter as reported by Italian news agency ANSA.

Glencore declined to comment on the report of the letter.

"We do not see many reasons to be hopeful," FIM Cisl national secretary Marco Bentivogli told Reuters.

On Thursday, the industry ministry said a request by Glencore for a power price at the plant of no more than 25 euros per megawatt hour could not be accepted since it was not in line with average electricity prices in Europe.

The 35 euros/MWh previously proposed by the government was in line with the European average, the ministry said. The cost of power for Italian consumers is around 70 euros/MW. (Editing by James Jukwey)

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Comments (1)
jscott418 wrote:
You can’t blame business for looking at costs. France is just another Country unwilling to forgo the socialist agenda to reduce costs. I guess admitting that their government does not work.
I think the US is in the same boat. Want’s all kinds of government but nobody wants higher taxes to pay for it. Unless of course you tax the really rich like france and at a 75% rate! As if the rich won’t just relocate. Get a clue France. The wealthy won’t bankroll your foolish spending and debt!

Sep 29, 2012 7:45pm EDT  --  Report as abuse
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