Benito Mussolini had Carbonia built and christened after coal, personally inaugurating the new Sardinian town in 1938.

The fascist leader was following a millennia-old Sardinian practice of naming places after the minerals mined there for so long, including silver, gold, copper, lead and zinc.

Today, ruined settlements testify to the abandoned workings and jobs lost across the island in recent decades, with the Italian government in Rome fearing it will soon preside over the closure of yet more plants amid the worst postwar crisis to hit Italian industry.

US-based Alcoa at the weekend began the closure of its aluminium smelter at Portovesme in southwest Sardinia in the absence of a potential buyer. Commodities producer and trader Glencore, which has a plant next door, discussed the situation with government officials last week but a takeover offer appears unlikely.

The axe is also hanging over Italy’s last coal mine, the lossmaking Carbosulcis, near Carbonia, although Sardinia’s regional government, which owns the mine, may have persuaded workers to give up a week-long underground protest occupation by promising to keep jobs going into next year.

Some 2,000 jobs are at stake, including satellite industries, if the two plants shut down. But they are part of a much wider picture of severe economic decline that poses a bigger threat to government efforts to reduce Italy’s €2tn public debt than the elevated market interest rates that preoccupy euro-politicians and bankers.

“Jobs are the real emergency in this country,” warned Susanna Camusso, leader of the CGIL, Italy’s largest trade union federation.

On Monday, Fiat car workers return to their renovated Pomigliano plant near Naples after their summer shutdown, but they will be laid off for two more weeks at the end of the month. Car sales in Italy are at their lowest level in over 30 years, pushing Fiat to consider closing a second plant after shutting down Termini Imerese in Sicily last year.

While industry as a whole has recovered in Germany and France from the latest recession, output in Italy is more than 22 per cent below the peak reached in 2008. As well as cars and minerals, marked declines have been registered in production of textiles, clothing, accessories, rubber and plastics, and consumer goods.

The ministry of economic development – headed by Corrado Passera, former banker and aspiring politician – has its hands full with some 150 sets of crisis talks dealing with potential factory and enterprise closures, and 30,000 job losses, including Alcoa and Carbosulcis.

Unemployment is rising steadily, reaching 10.7 per cent in July. Over 35 per cent of people aged 15 to 24 are jobless. Sardinia is much worse than the national average. But all the jobless figures mask the more alarming statistic that Italy has one of the lowest employment rates in the eurozone.

Alarmed by headline grabbing workers’ protests and the prospect that Italy’s economy may not start growing again until well into next year, the government is to launch talks with employers associations on Wednesday and the unions next week.

“Sardinia has to be restructured. We cannot permit the desertification of an entire region,” Sergio Bonanni, leader of the CISL labour federation, said on Sunday.

Confindustria, the main employers’ lobby, is urging the government to provide up to €1bn in tax breaks as incentives for investments, blaming high taxes and labour costs as well as energy prices for the country’s industrial decline.

But driven by a need to cut spending and maintain high taxes to appease markets through slashing its budget deficit, Mario Monti’s technocrat government appears little inclined to prop up what it sees as sunset industries. The prime minister’s focus is on growth through liberalisation without extra spending, even if some ministers harbouring political ambitions may be tempted to appease certain social sectors.

Mr Monti wants to cut bureaucracy and correct an expensively slow judicial system. But the government is also telling business and unions to implement their own reforms to boost productivity, including more company-based pay negotiations to replace collective bargaining – an issue that drove Fiat to pull out of a reluctant Confindustria last year.

Manolo Mureddu, a father of three, was among Alcoa workers blowing horns and banging their helmets on the ground outside Mr Passera’s ministry in Rome on Friday as their fates were discussed inside. Sardinia was being devastated by the crisis, he said. “There is no clear industrial policy in our country, nor are there politicians who take responsibility,” he charged.

Additional reporting by Giulia Segreti

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