ROME Italian metal workers called off a strike at Europe's biggest steel plant on Saturday after an emergency meeting between government, unions and company management to save the ILVA factory from closure.
The battle over the future of ILVA, owned by the Riva Group, has been one of the biggest challenges faced by the government of Prime Minister Mario Monti and a symbol of the struggle to preserve heavy manufacturing in Italy.
Union workers, who earlier stopped two of the plant's steel works and a blast furnace to put pressure on management to ensure the future of the site, said they ended their strike, after the government promised their salaries would continue to be paid.
But the Riva Group later released a statement saying ILVA would only be able "to meet its commitments, starting with the payment of wages" if steel products seized by an Italian court were released, in line with a government order.
ILVA produced 8.5 million metric tons of steel in 2011, nearly 30 percent of Italy's total output, and the government says its closure would cost the wider economy up to 9 billion euros (7.5 billion pounds), with knock-on effects throughout the whole of Italian industry.
The government is in a standoff with a court that ordered the factory to shut until it updates its facilities to reduce pollution, which the court says has led to increased deaths from cancer and respiratory diseases in the southern city of Taranto.
Fearing even a temporary shutdown would threaten the future of the troubled plant, which provides 20,000 jobs in an area of high unemployment, the government last month passed a law overriding the court judgement and allowing the plant to stay open as it undergoes the two-year clean-up.
It also returned to company management key factory installations taken into court administration in July, and ordered the release of 1 billion euros worth of steel production seized in November after the arrest of several members of the Riva family.
The court refused to release the steel output, judicial sources told Reuters earlier this month. It has also appealed to Italy's constitutional court, accusing the government of interfering with an investigation. A judgement is expected on February 13.
"With absolute respect for the judiciary... <the government decree> should be immediately implemented to trigger the virtuous cycle of cleaning the environment and protecting health and employment," the government said in a statement after the meeting late on Friday.
The unions have found themselves in conflict with community groups in Taranto, who argue that jobs should not come at the expense of public health. Residents of Taranto will vote on April 14 on whether the site should be partly or fully shut, according to daily newspaper Corriere della Sera.
Data released on Friday showed industrial orders in Italy's metal industry in November 2012 were down 12.1 percent compared to the same month a year earlier.
(Reporting by Naomi O'Leary, Editing by Mark Trevelyan)
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