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UPDATE 1-Hydro CEO says focus on full output at Alunorte, no layoffs

Kitco News

* Keeping all staff in anticipation of full production
* Cannot give time for full operation
* Aluminium demand little affected by U.S-China trade dispute
(Adds CEO comments on aluminium market)

OSLO, Oct 10 (Reuters) - Norway's Norsk Hydro is focused on a return to full output at its Alunorte alumina refinery in Brazil and is not contemplating layoffs there, CEO Svein Richard Brandtzaeg told Reuters on Wednesday.

Hydro had said last week it would close down the world's largest alumina refinery and lay off 4,700 workers as attempts to resolve an environmental dispute with Brazilian authorities faltered. This week it announced it has been granted permits from the authorities to restart operations at half capacity. "The way we are operating now requires more staffing. As long as we have a positive dialogue with the authorities we will keep the staffing. We believe the embargo will be lifted and then we need all our people," Brandtzaeg told Reuters in a telephone interview.

Hydro was ordered by Brazilian regulators in February to slash output by half at the refinery after the company admitted making unlicensed emissions of untreated water during severe rains. "It's difficult to give exact timeline for a full restart but we are now in the process of implementing measures we agreed on with authorities in September," he said. The plant has an annual capacity of 6.4 million tonnes of alumina, or 10 percent of capacity outside China.

Alunorte transforms bauxite into alumina, which is turned into aluminium at huge smelters.

Alumina and aluminium prices have been pushed up by Hydro's production cut at Alunorte. Brandtzaeg acknowledged it was unfortunate that Hydro one week announced plans for closure and the next week plans to recover output.

"We want stable and predictable operations, but in this case it was not possible," he said.

Overall demand in the market was "quite good", driven by auto industry and global GDP growth, Brandtzaeg said, repeating Hydro's forecast for an aluminium market deficit of 1-1.5 million tonnes this year.

"There's still a lot of aluminium in storage but its gradually reducing. The supply deficit is covered by reserve capacity in China but even with China we have a deficit of 1-1.5 million tonnes globally," Brandtzaeg said.

He said the trade war between China and U.S. so far had little impact.

"It seems consumers have to pay for this. Margins for U.S. exporters seems to be the same (despite a tariff increase on Chinese aluminium)," Brandtzaeg said.

(Reporting by Ole Petter Skonnord; editing by Jason Neely)

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