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Rio Declares Force Majeure on Two Canada Aluminum Smelters

Jan. 5 (Bloomberg) -- Rio Tinto Group, the world’s third-biggest mining company, declared force majeure on shipments from two aluminum smelters in eastern Canada because of a technical glitch and a labor dispute.

Production capacity at the Shawinigan plant in Quebec was reduced by 50 percent after two of four pot-lines went off-line because of a circuit-breaker failure, the London-based company said yesterday. Output was cut to one-third of capacity at its Alma smelter, also in Quebec, as Rio Tinto Alcan locked out 755 workers on Jan. 1 after contract talks broke down in December.

“We’ve declared force majeure at Rio Tinto Alcan’s Shawinigan plant and Alma smelter,” David Luff, a company spokesman, said today by phone from Melbourne. Force majeure is a legal clause that allows companies to miss deliveries because of circumstances beyond their control.

The Alma smelter has annual capacity of 438,000 metric tons and the Shawinigan plant 100,000 tons. Rio said in October that its global production target for the metal for 2011 was 3.9 million tons.

“Rio Tinto Alcan will monitor the situation and keep customers informed of any potential impact to supplies and delivery schedules,” Luff said.

The shares closed 0.5 percent lower at A$62.85 in Sydney, while the benchmark index fell 1.1 percent.

Rio Tinto relies on aluminum for almost 25 percent of its annual sales, according to data compiled by Bloomberg. The metal producer doesn’t have a date for when output at the Shawinigan plant, scheduled to close in 2015, will be restored, Bryan Tucker, a company spokesman, said by telephone from Montreal yesterday.

To contact the reporters on this story: Soraya Permatasari in Melbourne at soraya@bloomberg.net; Sonja Elmquist in New York at selmquist1@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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