UPDATE 1-Rio Tinto cuts Australia bauxite output

Mon Apr 6, 2009 9:56pm EDT

Related Topics

* Weipa 2009 output cut to 15 mln tonnes

* Yarwun refinery expansion slowed

* 100 permanent jobs lost (Adds company comment)

SYDNEY, April 7 (Reuters) - Miner Rio Tinto (RIO.L) RIO.AX> will cut bauxite production at its Weipa in northeastern Australia by about 23 percent in response to falling demand as the global economy slows.

Rio Tinto said in a statement on Tuesday it would cut output at Weipa to 15 million tonnes in 2009 from 19.4 million tonnes in 2008, costing about 100 permanent jobs. The miner said it would also slow the expansion of the Yarwun alumina refinery at Gladstone in Queensland state, with the expansion now expected to be completed in the second half of 2012.

The Weipa mine supplies bauxite to Rio Tinto Aluminium and its partners in the Queensland Alumina Ltd refinery at Gladstone as well as to Yarwun.

Rio has been cutting production of products such as iron ore and coal as well as bauxite in response to waning demand, while also selling assets to reduce debt as shareholders contemplate a proposed $19.5 billion tie-up with Chinese state-owned aluminium group Chinalco.

Rio Tinto Alcan Bauxite and Alumina president Steve Hodgson said current demand for aluminium remained poor and despite major industry wide production cutbacks, stocks continued to increase.

"Even with alumina industry capacity cuts equivalent to 21 million tonnes per year since the beginning of the crisis, including cuts of 12 million tonnes made since January, there is still little improvement in the alumina price," said Hodgson in the statement.

He said at current prices about 70 percent of the global industry was operating at a loss.

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