Aluminium producer Alcoa Inc (AA.N: Quote) will cut production at its Portland operation in Australia by another 38,000 tonnes as it seeks to survive a downturn that has hit metals prices.

The group said in a statement on its website on Wednesday that the reduction, in addition to a 15,000-tonne cut in December, will bring total annual output down 15 percent to 305,000 tonnes.

The business will also work consultatively with employees, unions, contractors and suppliers to achieve an overall 10-15 percent cost reduction by the end of 2009, the statement said.

Portland Aluminium has been a strong and high performing business but, as with many other businesses around the world, we are facing economic challenges which require us to take decisive action now for a strong business in the future.

Alcoa of Australia would seek to avoid job losses, Managing Director Alan Cransberg said in the statement.

The Portland smelter, in South West Victoria, is 55 percent owned by Alcoa, 22.5 percent by China's CITIC Nominees and 22.5 percent by Japan's Marubeni Aluminium Australia (8002.T: Quote).

On April 7, Alcoa reported a second consecutive quarterly loss as metal prices and the autos industry slumped and global demand fell in the economic downturn.

(Reporting by Eric Onstad, editing by Sue Thomas)

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