MILAN--Glencore International PLC (GLEN.LN) has withdrawn its
interest in bidding for a production facility in Portovesme,
Sardinia, that U.S. aluminum maker Alcoa Inc (AA) is closing,
several Italian dailies report Sunday.
According to the newspapers, Glencore wrote a letter to Italy's
Industry Ministry and to the President of the Sardinia region
saying it deemed the conditions of the deal proposed by the
government economically unsustainable.
The decision by the company follows a statement by the Industry
Ministry, which said Thursday it couldn't accept a request from
Glencore to obtain cheaper energy prices from suppliers in case it
were to purchase the smelter in Sardinia owned by Alcoa.
The ministry also said the electricity price equal to or below
25 euros ($32.1) per megawatt-hour requested by Glencore "is not in
line with the average prices seen in Europe." Instead, the ministry
proposed a price of EUR35 per MWh.
However, in the letter quoted by the media, Glencore reportedly
said the final cost of energy of EUR35 per MWh has proven to be
insufficient to guarantee the continuation of production by Alcoa's
facility.
Alcoa is shutting the Portovesme plant as part of a global
restructuring.
Glencore was quoted as saying it was available to continue
discussing the plant's acquisition if alternative solutions were
possible.
Industry Minister Corrado Passera was quoted as saying that
while he would have liked Glencore to have invested in the plant at
the conditions the government proposed, there are other companies
that could be interested in buying the facility.
The papers report that Switzerland-based Klesch and another
company are interested in buying the plant.
Mr Passera added, the newspapers report, that the energy
price-levels proposed by Glencore were neither market prices nor
prices authorized by the European Union.
Write to Giovanni Legorano at giovanni.legorano@dowjones.com