Rio sees 1/3 capacity at lockout-hit aluminum smelter

Tue Jan 3, 2012 10:49pm GMT

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* Says working with customers, no comment on chances of Force Majeure

* Says prepared to operate Alma smelter at 1/3 capacity for duration of labor lockout

* Says Alma alumina smelter in Quebec being run at 1/3 capacity by 200 managers

* Says has not hired outside workers

(Adds details from third paragraph)

By Pav Jordan

TORONTO, Jan 3 (Reuters) - Rio Tinto Alcan is prepared to operate its Alma aluminum smelter in eastern Canada at one-third capacity during a union lockout that began on Jan. 1, a spokesman said on Tuesday.

"There are 200 managers that are operating the plant right now and are going through the process of shutting down the second third of production," spokesman Bryan Tucker told Reuters.

"We are prepared to operate at 1/3 of the capacity for the duration of the labor disruption," he said. "I am not going to speculate on how long that will be, but we are prepared to carry on the operation there."

Alma, in Saguenay-Lac-Saint-Jean, Quebec, is Rio Tinto Alcan's largest wholly-owned aluminum smelter, with output capacity of some 438,000 tonnes of aluminum.

But prices of the metal have been under pressure as the euro zone crisis and economic problems elsewhere trigger concern about global growth and demand for industrial metals. The London Metal Exchange (LME) three-months aluminum price CMAL3 was last indicated at $2,077 a tonne, down 16 percent from a year ago.

Rio Tinto Alcan, a unit of Anglo-Australian mining giant Rio Tinto (RIO.AX) (RIO.L), started slashing production at Alma on Jan. 1 when it locked out 755 union workers after failing to replace a contract signed in 2006, in happier economic times.

Tucker declined to speculate on whether or when the company might have to declare force majeure should the lockout continue. He said other Quebec smelters were at full capacity and unable to pick up any of the slack caused by the lockout.

"We are working hard at limiting the impact on customers and looking for all options available in terms of delivery to customers," Tucker said by telephone. He gave no detail.

Alma is one of several wholly-owned Rio Tinto Alcan smelters in the Quebec region, where it also owns a refinery.

Rio Tinto Alcan sends its aluminium to customers and to LME warehouses, so in theory it could send more alumimum to consumers and less to warehouses, delaying any need to break contracts.

Rio began bargaining with the union, Syndicat des travailleurs de l'aluminium d'Alma, on Oct. 4.

(Reporting By Pav Jordan; editing by Rob Wilson)

((pav.jordan@reuters.com)(416 941 8163)(Reuters Messaging: pawel.jordan.reuters.com@reuters.net)) Keywords: RIOTINTOALCAN/CANADA

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