Queensland Alumina Limited - March 2, 2017.
Queensland Alumina Limited - March 2, 2017. Mike Richards GLA020317QAL

US sanction could force alumina target reduction for Rio Tinto

RIO Tinto has warned it could reduce its 2018 alumina production target for Queensland Alumina because of the United States' sanction on Russia.

The newly imposed sanction could affect operations at the refinery because it is partly owned by Russian firm Rusal.

In its first quarter report, the company set its 2018 guidance for alumina production at 8-8.2 million tonnes.

But it said adjustments may be made as a consequence of the US sanctions, announced on April 13.

The sanctions, imposed in response to what the United States called "malign activity around the globe", caused shares in Rusal to almost halve in value on the Hong Kong stock exchange last Monday.

The company confirmed in an Australian Stock Exchange announcement it was in the process of declaring force majeure - to limit its exposure to the sanctions - on certain contracts.

It said it was working with customers to minimise any disruption in supplies and it was "fully committed" to complying with the US sanctions.

Earlier this month the company's aluminium chief executive Alf Barrios said it was too early to know if QAL could potentially be affected by the new sanctions.

Meanwhile the first quarter report showed aluminium production was five per cent lower than the same period last year.

Queensland Alumina produced 717,000 tonnes during the first four months of the year.

Boyne Smelter Limited's production was 8000 tonnes less than the same time last year and dropped to its lowest in 12 months.

The smelter cut production, and jobs were lost, in March last year, which the company blamed on high electricity prices.

Rio Tinto Yarwun produced 793,000 tonnes of alumina during the first quarter.

The remaining 80 per cent of QAL is owned by Rio Tinto.