UPDATE 2-Rio cuts Australia alumina output, no aluminium impact

(Adds details, analyst comment, share prices)

By James Regan

SYDNEY, Aug 15 (Reuters) - Rio Tinto Ltd (RIO.AX) (RIO.L) has sharply reduced output at its Yarwun alumina refinery in Australia after a blocked pipeline was discovered, but did not see any impact to aluminium production.

The outage, which began on July 29, would last until the end of August, company spokeswoman Diane Collier said on Friday.

The refinery normally yields 4,000 tonnes of alumina per day, or 1.4 million tonnes annually. It is located near Rio's Boyne Island aluminium smelter, which churns out a half-million tonnes of aluminium each year.

It takes roughly two tonnes of powder-like alumina, derived from bauxite, to make 1 tonne of aluminium.

Some alumina production was still going ahead while repairs were being made, according to Collier, without elaborating.

"We are running at partial capacity," she said

She said Rio was able to meet all of its alumina sales commitments by tapping its other refineries, buying alumina from outside sources and drawing on its own stockpiles.

"There will be no impact on aluminium production," Collier said, adding there had been no declaration of force majeure.

Force majeure is invoked by companies when circumstances beyond their control mean they cannot meet orders.

"I wouldn't expect much of an impact in world alumina markets from this, particularly given just about all the commodity markets are more focused on demand than supply right now," Mark Pervan, senior commodities strategist for Australia & New Zealand Bank said.

Alumina has been consistently selling for around 15 percent of the London Metal Exchange aluminium price MAL3, currently $2,765 per tonne, Pervan said.

Rio, which is fighting a $123 billion hostile takeover from rival BHP Billiton Ltd (BHP.AX) (BLT.L), a larger diversified mining house that also operates alumina refineries, declined to comment on the cost of the outage.

The refinery was built in 2004 at a cost of $1.5 billion.

In July 2007, Rio announced it would spend $1.8 billion to more than double annual production to 3.4 million tonnes by 2011. Rio also holds a majority stake in the nearby Queensland Alumina Ltd (QAL) refinery, one of the largest alumina refineries in the world. Russian aluminium maker Rusal holds a minority interest.

Rio was down 2.8 percent to A$114.69 in early afternoon trading, while BHP was 1.7 percent lower at A$38.05. ($1=A$1.15) (Reporting by James Regan; Editing by Michael Urquhart)