September 19, 2012 / 1:18 PM / 6 years ago

Glencore seen making offer for Alcoa Italy plant

MILAN (Reuters) - Swiss commodities trader Glencore (GLEN.L) is expected to present a letter of intent for the troubled Sardinian plant of U.S. aluminum maker Alcoa (AA.N) in the next 10-15 days, a Sardinian government official told Reuters on Wednesday.

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 government has provided a guarantee, requested by Glencore, to keep the power price at 35 euros (per megawatt hour) over 15 years,” Alberto Pili, a councillor for the Carbonia-Iglesias province where the Alcoa plant is located.

“Glencore has committed to present a letter of intent to Alcoa within 10-15 days,” he added.

Alcoa has decided to close down its Sardinian smelter, a move that puts at risks the jobs of 500 direct employees.

Earlier on Wednesday the government met with Glencore and regional representatives to discuss energy costs at the plant, one of the main reasons it has found it difficult to compete.

Sardinia President Ugo Cappellacci also said he was hopeful in an offer by Glencore within 10 days as he came out of the Rome meeting.

At the beginning of September the government wrote to Glencore to reassure it on power discounts for 15 years if it decided to buy the plant.

“If a solution can be found that benefits all parties, than Glencore would look to help,” a source close to the company said.

A price of 35 euros per megawatt hour would be significantly below the approximately 70 euros per megawatt hour power would cost without subsidies but there are concerns it could be construed as state aid.

The EU Commission has previously asked Italy to recoup aid from favorable power tariff schemes.

Reporting By Lisa Jucca

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