It had planned to idle them after the EU ordered the company to repay state aid. Reuters reported Italy’s government had said the agre-ement on the plants, which employ about 2000 people, had been struck after talks with Alcoa and unions.

In November, Alcoa said it would temporarily idle operations at its 194kt/y smelters at Portovesme in Sardinia and Fusina near Venice after the European Commission ordered it to pay back most of the state aid it had received in Italy since 2006.

A statement from the Prime Minister’s office said the agreement was made possible by a decree that lowers electricity tariffs for heavy corporate energy users.

“Within six months, following the European Commission's decision on the decree and an evaluation by the company, Alcoa will make checks that will take into account the evolution of the market,” the statement said.

Alcoa, the government and other parties involved will meet again in April, it said. The European Union’s executive body ruled that Alcoa must repay state power subsidies previously agreed to by the Italian government and the aluminium producer.

Alcoa argues that a $300M penalty imposed by the Commission, which is currently under appeal, would have a ‘devastating impact’, given the dramatic decline in aluminium prices amid the global recession.