TARANTO, Italy, Sept 26 (Reuters) - A judge rejected a plan on Wednesday by steelmaker ILVA to clean up its heavily polluting factory in southern Italy, raising new doubts over the future of Europe's biggest steelworks.
Court sources told Reuters that Patrizia Todisco, the judge in charge of pre-trial proceedings, ruled against the Italian group's plan to invest 400 million euros to modernise the plant while allowing production to continue.
"The things at stake, rights to health and work, do not allow for bargaining," Todisco said.
In August, prosecutors ordered ILVA to stop production and clean up the factory in Taranto, Italy, after an inquiry found that toxic chemicals pumped from the plant were harming workers and local residents.
The order threatens some 12,000 jobs at the mill, and an additional 8,000 related to it, and prompted a chorus of complaints from politicians, trade unionists and industrialists.
The mill began shutting down this week and has been running at reduced capacity since July, though in an interview last month director Bruno Ferrante said it was able to meet customer demand fully.
The government said earlier this month it was committed to keeping it open.
Government-appointed experts are currently assessing whether to grant ILVA environmental clearance, with a decision expected by the end of the month.
Following the judge's decision, Italy's metalworkers' union called a two-day strike at the factory to protest the threat of closure.
Plant administrators, placed in charge of key parts of the site by prosecutors last month, began shutting down one of its furnaces on Wednesday morning, Italian media reported. ILVA did not immediately respond to a request for comment.
ILVA produced 8.5 million tonnes of steel in 2011, nearly 30 percent of Italy's total output, and is one of the few big industrial plants in Italy's impoverished south.
Toxic emissions from the mill have been blamed for hundreds of deaths. A study promoted by the health ministry showed death rates from cancer in the area were 15 percent higher than in the rest of Italy, and 30 percent higher in the case of lung cancer.
Italy's year-long recession has driven unemployment up to 10.7 percent nationally, the highest level reached since the current data series compiled by state statistics office ISTAT began in 2004. In southern Italy, joblessness exceeds 17 percent.
Reporting by Vincenzo Damiani. Writing by Naomi O'Leary; Editing by John Stonestreet