UPDATE 3-Italy races to save ILVA plant as workers storm factory
* Striking plant workers occupy part of factory
* Government plans to have solution ready by Thursday
* Sensitive issue for government struggling to save jobs
* Seven arrested, five investigated for bribing officials
* Court says pollution caused high rate of deaths in area (Adds further investigations, details of arrests)
By Vincenzo Damiani
BARI, Nov 27 (Reuters) - Workers stormed Europe's biggest steel plant ILVA, which faces closure over allegations of an environmental disaster, as Italy's government raced to save 20,000 threatened jobs.
Management closed the factory's cold rolling facility, which produces finished steel plates, strips and pipes, after a Monday court ruling to seize the plant's steel output, which the company said would force it to close.
A company spokesman told Reuters it was appealing against the ruling.
The case puts 20,000 jobs at risk in a region of high unemployment, and is seen as a test of the ability of the technocrat government of Mario Monti to protect Italy's heavy industry as it tries to pull the country out of economic crisis.
Unions called a factory-wide strike over the closure of the cold rolling section at the sprawling site in Taranto, southern Italy, part of an escalating stand-off between courts and the government, which last month said ILVA could continue operating on condition it cut emissions and cleaned up the plant.
Workers who turned up for work on Tuesday morning found the gates locked, and several thousand stormed the facility and began a sit-in, angrily confronting plant manager Adolfo Buffo as he attempted to calm the situation.
"There are those who have worked here for 30 years who would never have imagined such a dramatic evolution of the situation," said the secretary of metal workers union Uilm, Rocco Palombella. "There is anarchy in Taranto."
ILVA produced 8.5 million tonnes of steel in 2011, nearly 30 percent of Italy's total output. As well as the jobs immediately at risk, there has also been growing concern about the knock-on effects of a long-term closure on the rest of Italian heavy manufacturing.
Earlier this month the company applied for unemployment benefits for a maximum of 2,000 workers in its cold rolling section, citing crisis in the steel industry.
Over a thousand workers at an ILVA processing plant near Genoa in northern Italy, which workers say will last just four days without supplies of steel from the southern plant, blocked a motorway into the city in a protest march.
SOLUTION BY THURSDAY?
ILVA is a deeply sensitive issue for the government, already facing widespread protests about the impact of its austerity policies and desperate to preserve employment and protect one of a shrinking number of major manufacturing employers in the poor and underdeveloped south.
Environment Minister Corrado Clini said the government would have a plan to save the vast industrial site in time for a meeting with management on Thursday.
"We are working to resolve this situation quickly, and I think we will have a solution ready for Thursday," Clini said, when Prime Minister Monti, key ministers, union leaders and the steel factory's management meet in Rome.
Metalworkers' unions called a 24 hour strike and demonstrations in the capital to coincide with the meeting and pressure the government to reach a deal.
A government source told Reuters "legions of legal experts" were at work to find a way to allow production to continue at the plant "without violating the court's authority".
Several installations at the site, including a blast furnace, have been placed under the control of court-appointed administrators since July to clean up the company's emissions.
Clini has accused judges of overstepping their authority on the matter.
"Instead of accusing the judiciary of replacing the government, minister Clini should thank them for putting an end to environmental pollution," Senator Felice Belisario said on Monday. "In our country the law is dictated by powerful interests."
Toxic emissions from the factory have been blamed for abnormally high cancer rates and respiratory diseases. ILVA denies its operations are connected with the elevated mortality rates in the region.
Prosecutors on Monday ordered the arrests of seven people suspected of bribing officials to cover up environmental damage at the sprawling site.
Among them was Emilio Riva, founder and president of the family-run Riva Group, which owns ILVA and is Europe's third-largest steel producer. A company spokesman said he was under house arrest.
On Tuesday prosecutors put six further people under investigation in the case. (Additional reporting by Paola Balsomini in Genoa and Massimiliano Di Giorgio; Writing by Naomi O'Leary; Editing by Mark Potter and Helen Massy-Beresford)