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Italy orders Ilva steel plant to limit output, upgrade furnaces

ROME, Oct 12 (Reuters) - Italy's Ilva steel plant must limit annual production and shut down Europe's biggest blast furnace for upgrades in order to get an environmental license to operate, according to the Environment Ministry.

The factory in the southern city of Taranto must limit its annual steel production to 8 million tonnes, compared with last year's output of 8.5 million tonnes, according to a document outlining the work that had to be done to keep the plant running.

The plant began a shutdown last week after a court ordered it to close because of evidence that pollution was causing above-average cancer rates in the surrounding area.

The court's plan sparked a series of protests by labor unions, which said a pause in production would put the future of the factory in doubt and risk jobs in a region already suffering above-average unemployment, creating a headache for the government of Prime Minister Mario Monti.

Ilva employs 12,000 workers directly while another 8,000 people are indirectly employed by the sprawling site located in the heel of Italy's boot. It accounts for more than a third of Italy's total steel output, the second-biggest producer in Europe after Germany.

The ministry said it must also shut down and upgrade several of its coke oven batteries and blast furnaces, including one which is Europe's biggest, with the aim of reducing the mill's toxic dust emissions.

The huge, continuously operating blast furnaces cannot be switched off without a long-term shutdown of the site, stoking some fears that it could be closed down permanently.

It is not yet clear whether the ministry's requirements will trump the upgrades ordered by the court, which has taken over management of a large part of the factory to oversee its clean-up.

(Reporting by Massimiliano Di Giorgio; writing by Steve Scherer and Naomi O'Leary, editing by Gary Crosse)

((steve.scherer@thomsonreuters.com; +39-06-8522-4369))

Keywords: ITALY STEEL/ILVA