ROME, Jan 17 (Reuters) - The Italian government has reached a deal with domestic machine-maker Danieli and Ukraine's Metinvest to relaunch the Piombino steel-making site in Tuscany, the industry ministry said in a statement on Wednesday.

Separately, Rome is working to reach a similar agreement with JSW Group to further expand production in Piombino, where the Indian steel-to-power conglomerate is already operational, people familiar with the matter told Reuters.

Thanks to the involvement of both the Ukrainian and Indian groups, the government is aiming for a steel production cycle focused on track manufacturing in the city, the people added.

Metinvest, Ukraine's largest steelmaker, is looking for production sites abroad to offset significant asset losses due to the war with Russia, including the vast Azovstal steel plant in Mariupol that was destroyed during a prolonged Russian siege.

Yuriy Ryzhenkov, Metinvest's chief executive, said in the statement the investment plan would target a capacity of around 3 million tons of steel and contribute to Italy's green transition.

Once the project with Metinvest and its two partners is fully operational, it will employ a total of about 1,500 people directly and in related industries, Industry Minister Adolfo Urso said.

"Today's agreement marks a crucial step in efforts to boost the Piombino site, which will play a central role in our national steel plan," Urso added.

Italy is also seeking ways to keep the troubled former Ilva steel company afloat despite a clash with its main shareholder ArcelorMittal.

The fate of Acciaierie d'Italia (ADI), as Ilva is now known, is a major headache for Prime Minister Giorgia Meloni, as its closure would cost thousands of jobs and have serious knock-on effects for the Italian manufacturing sector. (Reporting by Giuseppe Fonte, editing by Gavin Jones and Bernadette Baum)