Italy's government on Monday met with the board of ILVA, the steel group mired in a growing environmental and corruption scandal, as pressure mounted for a change in the ownership structure of Europe's largest steel plant.

The board of ILVA announced its resignation on Saturday over the seizure of 8.1 billion euros ($10.5 billion) in assets from the Riva family, which controls the plant in the southern city of Taranto in Puglia.

Officials attending the meeting on Monday said the time had come to consider transferring ownership of the plant away from the Riva family.

"To me it seems the moment has arrived to separate the destinies of the family and the company," said Puglia governor Nichi Vendola after the meeting. "Extraordinary administration is the best way to press ahead with the clean-up and activities at the plant," he said.

Magistrates ordered the assets to be seized from holding company Riva Fire on suspicion of criminal association to commit environmental offences linked to steel production at ILVA, one of the biggest industrial employers in southern Italy.

They placed the group's chairman Emilio Riva under house arrest last year and opened investigations into alleged corruption and tax evasion by the group's management.

At stake are the jobs of some 12,000 ILVA employees and at least another 8,000 ancillary workers at the plant, situated in a region already suffering from high unemployment, as well as the future of one of the mainstays of Italy's steel industry.

Maurizio Landini, secretary of the Fiom metalworkers union, said on Monday the Taranto plant needs a "different ownership structure" that excludes the Riva family and "gives back confidence to all those people that are related to the company".

Riva Fire said in a statement the seizure of the assets could delay the approval of an industrial plan for 2013-2018, which it warned could send the situation at the plant "out of control" and could have repercussions for workers.

ILVA said on Saturday it would mount a legal challenge to the asset seizure. Investigative sources said the Taranto plant would continue to work normally following the asset seizure.

ILVA has been at the centre of a long judicial battle over accusations that toxic emissions of dust particles from the sprawling site have caused abnormal levels of tumours and respiratory diseases around Taranto in the region of Puglia.

FUTURE IN BALANCE

The government has been caught in the middle of a complex battle over the future of ILVA since prosecutors ordered the partial closure of the plant in July last year following a damning series of environmental reports.

ILVA, which produced some 8.5 million metric tons of steel in 2011, almost 30 percent of total Italian output, has been operating under court administration ever since and has outlined a two-year cleanup plan for the site.

According to prosecution documents, emissions of dioxins, benzoapyrene and other cancer-causing chemicals caused an "environmental disaster", damaging the health of Taranto residents and affecting farming and fishing for miles around.

Italy, stuck in its longest postwar recession and fighting unemployment running as high as 40 percent among young people, can ill afford the loss of one of the few major industrial employers in its poor and underdeveloped south.

The seizure of the Riva Fire assets will not directly impact steel production in Taranto but the resignation of the two administrators in charge of ILVA - chairman Bruno Ferrante, who is now under investigation himself, and chief executive Enrico Bondi - has left its future in the balance.

Officials said before the meeting on Monday that the government hoped the board of ILVA would withdraw its resignation.

"We hope that circumstances will allow a rethink," industry ministry State Secretary Claudio Di Vicenti told RAI News 24 television.

($1 = 0.7734 euros)

(Writing by James Mackenzie and Catherine Hornby; Editing by Catherine Evans/Ruth Pitchford)